Equity release activity nears pre-pandemic levels in Q2 as existing customers return

The Equity Release Council has published its Q2 2021 equity release market statistics which show that lending is nearing pre-pandemic levels as existing customers return to the market.

Statistics show an increase in consumer confidence as 20,352 new and returning customers accessed property wealth between April and June, up from 16,527 in Q1 2021 and 13,617 in Q2 2020, when households and employers were adjusting to pandemic conditions.

Homeowners in the over-55s age group have reportedly accessed £1.17bn of property wealth in Q2 2021, which represents a 2% increase on Q1 2021 and a 67% year-on-year increase from Q2 2020 during the first Covid-19 lockdown.

Drawdown lifetime mortgages have remained the most common type of new plan agreed (55%), say the Equity Release Council, although more customers took out lump sums in June before the £500,000 Stamp Duty holiday ended.

David Burrowes, Chairman of the Equity Release Council, said that

“the equity release market is showing signs of stability and durability as the option to access property wealth opens doors for thousands of people to pursue their financial goals”.

“We were accustomed to more than 20,000 new or returning customers releasing equity each quarter in the two years before Covid-19 struck”, he said, “we’re now seeing activity levels steadily returning back to that status quo, with some existing customers returning to make withdrawals that were put on hold last year”.

Trends among new customers showed that June was the busiest month for new plans agreed during Q2, and the first month for more than a year that saw more lump sum than drawdown plans agreed. This consumer behaviour, it is thought, is likely to be influenced by older customers releasing equity to help younger generations fund a house move ahead of the £500,000 Stamp Duty holiday which expired in June, or using equity release to move home themselves.

Burrowes explained that the figures demonstrate how

“equity release has become a socially important means for one generation to help another, as well as meeting later life financial needs. June’s Stamp Duty deadline will have prompted some older homeowners to pass on a ‘living inheritance’ so that younger family members can climb the property ladder.”

Mark Gregory, Founder and CEO at Equity Release Supermarket, commented,

“it is encouraging to see the broader equity release market grow in Q2, but ongoing COVID restrictions have continued to hamper customers putting their long-term financial goals into action.”

“It is unlikely that the huge increase in property purchase will continue now that the Stamp Duty holiday has ended, but parents supporting their children financially through a ‘living legacy’ is now a staple use of equity release”

he said,

“our recent research showed that 75% of those polled are still supporting their grown up children and 52% wished they could give their children more money.”

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