Equity-paid borrowers now have nearly 700 offers to choose from when making the decision to withdraw real estate, up from 88 five years ago.
Moneyfacts’ analysis of stock release product numbers found a 45% increase in trades, from 480 in January to 698 in August. The number of products has increased significantly over the past five years, by almost 700%.
Loan-to-value limits (LTVs) have also increased. In August 2016, the average maximum LTV was 49% in subsequent years, higher LTVs fell out of favor, and the average fell to 46% in April 2019. However, the Moneyfacts report shows that the LTV cap average is now back to 50 percent.
While rates are much lower today than they were five years ago, 5.76% vs. 4.32%, August rates are above their average price of 4.13% in August 2020.
Rachel Springall, Financial Expert at Moneyfacts.co.uk, said: “The stock release market has remained resilient in 2021 and, in fact, business is booming and is expected to grow in the years to come. Advisors remain bullish in the industry and lenders have made it clear that they are ready to compete and adjust their lines to borrower demand.
“Over the next decade, the amount of equity released per year is expected to increase from £ 3.7bn in 2021 to £ 6.4bn according to More2Life.”
Springall said that while rates have increased year over year, it is not surprising given that the average LTV has increased, bringing more higher priced offers to the market.
Samantha Partington is a freelance commerce and consumer journalist who writes on real estate and personal finance. Previously, she worked for the Daily Mail and Property Week. She is the former associate editor of Mortgage Solutions and editor of Specialist Lending Solutions. Prior to becoming a journalist, Samantha worked as a mortgage broker and most recently for a mortgage, bridge and secured loan lender. Samantha is CeMAP qualified. Follow her on Twitter @ SamJPartington1.