£1.4bn of real estate equity already freed up this year

Market analysis has revealed that UK owners have already freed up equity to the tune of £1.4bn so far in 2022, with that figure estimated at almost £5.6bn from here the end of the year.

Figures show that in the first three months of this year, more than 12,500 homeowners chose to use the pent-up value built up in their property via end-of-life mortgages – a 21.4% annual increase on in the first quarter of 2021.

Leading Mortgage Broker, Henri Dannellestimates that this figure could reach more than 50,000 by the end of the year, an increase of 19.6% on the 41,990 housing units to release equity in 2021.

With the total value of equity freed up in 2021 exceeding £4.4bn and already reaching £1.4bn in 2022, Henry Dannell estimates nearly £5.6bn could be freed up in real estate equity homes by the end of this year.

This increased market activity is driven in part by high net worth individuals and those at the top of the real estate ladder.

In fact, three of the country’s most expensive real estate areas rank highest for mortgage activity and value released later in life.

The South East (9%) and South West (6%) account for the largest proportion of total end-of-life mortgage plans so far this year and, together with London, also represent the highest value equity released in 2022 – totaling £810.5m in these three regions alone.

This upscale market trend is also apparent when looking at the average value of properties using end-of-life mortgages.

So far in 2022, the average capital-released house price stands at £373,493. This is already 2% higher compared to the first quarter of last year and 14% higher than the average property value paid up on equity observed in the first quarter of 2020.

Additionally, the current value of a property using the release of equity through end-of-life mortgages is 34% higher than the wider UK market average.

Henry Dannell manager Geoff Garrett commented:

“End-of-life mortgages have continued to grow in popularity among homeowners across the country, many of whom are now taking full advantage of the dramatic increase in their property values ​​over the past two years.

For some it has become a safety net to weather the rising cost of living, but we are also seeing this increased activity being driven by those at the top of the market who may not be facing the same financial difficulties as the average homeowner. .

This is due to a number of factors – greater product choice and greater flexibility means end-of-life mortgages are no longer the rigid and complex instrument they used to be and a competitive loan market has also helped reduce the cost of removing equity from a property.

For the vast majority, it’s a tax-efficient way to redistribute their wealth to future generations, allowing children or grandchildren to climb the first foot on the ladder, or perhaps move up a rung or two. upper.

Not only does this form of estate planning help minimize their potential inheritance tax bill, but it also allows them and their families to benefit from this redistribution of wealth here and now, rather than waiting for they died.

Along the same lines, the equity freed up from end-of-life mortgages can also enhance their golden years by supplementing their income or retirement, providing them with the disposable income to enjoy their life choices.

Equity release data from Key Advice
House price data from Gov.uk – UK House Price Index