Equity Release Market Still Recovering
According to the Equity Release Council, the equity release market has shown signs of recovery following the coronavirus pandemic, but numbers are still lower than in previous years.
£698m of property wealth was accessed by older homeowners in quarter two this year. This was almost £400m (34%) lower than quarter one (£1.064bn).
This figure doesn’t seem surprising, especially when looking at the wider economy, such as the Bank of England Data for April and May, which showed that gross lending secured on dwellings was down by 36% from February and March.
The number of new equity release plans agreed between in April and June also declines by 34% from 11,079 in quarter one 2020, to 7,341. This was the lowest amount of plans agreed in any quarter over the last four years. Quarter two in 2916, was the lowest previously recorded time, with 6,671 plans.
Unsurprisingly, May was the quietest month for new plans before initial signs of recovery followed in June as lockdown conditions began to ease.
The Equity Release Council also saw that customers held back from making further drawdowns from existing plans or seeking further advances as they waited to see the long-term impact of Covid-19.
David Burrowes, Chairman of the Equity Release Council, comments:
“Equity release market activity continued to mirror wider economic conditions, with the confidence of early 2020 giving way to caution as households assess the impact of coronavirus on everyday life.
“Careful precautions have kept the market open to those who wish to choose the option of equity release and ensured customers have access to property wealth to help meet important financial and social needs. That said, the fall in the number of new plans and fewer returning customers accessing extra funds are clear signs of people pausing to see how the wider situation unfolds.
“Property assets have long been one of the nation’s main sources of wealth and are likely to play an increasingly important role to support people when addressing the challenges facing many in later life, including bridging the savings gap for older homeowners who are asset rich but cash poor. Releasing equity is not a suitable choice for everyone, and our focus is on ensuring customers’ interests are protected at every stage of the process through structured financial advice, independent legal advice and clear product safeguards.”