Credit, Collections & Insolvency News
The number of borrowers releasing equity from their homes has neared pre-pandemic levels in the second quarter of this year, according to the latest figures from the Equity Release Council (ERC).
There were 20,352 new and returning customers in the market between April and June, a rise from 16,527 in Q1 2021 and 13,617 in Q2 2020. Over-55 homeowners accessed £1.17 billion of property wealth in Q2 2021, up 2% from £1.14 billion in Q1 2021 and up 67% year-on-year from Q2 2020 during the first Covid-19 lockdown.
Drawdown lifetime mortgages were the most common type of new plan agreed (55%), while returning drawdown customers, the most subdued part of the market during the pandemic, saw numbers rise 67%.
Equity release council chairman David Burrowes said “Judging by these latest figures, 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. We’re now seeing activity levels steadily returning to that status quo, with some existing customers returning to make withdrawals that were put on hold last year. The gradual recovery suggests people are carefully weighing up their circumstances and long-term needs, helped by specialist financial and legal advice, with speculation about a spike of activity during the pandemic so far proving unfounded.
“The steady recovery has been helped by confidence in the wider property market, where house price gains over the last year have given many homeowners more equity at their disposal. 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.”
Commenting on the figures Will Hale, CEO at Key said “The second quarter of the year highlighted the continued strength in the equity release market with overall customer numbers echoing pre-pandemic levels. With a strong increase in the number of existing customers returning to make further withdrawals this is a good indication that confidence levels are returning and that older customers are getting on with their plans for later life and looking to the equity in their home to help fund these needs and wants.”
“Gifting, mortgage repayment and debt management continued to be the driving force behind decisions for many customers in Q2 with the Stamp Duty Holiday providing a particular boost. With this Government initiative now tapering off, it will be interesting to see how the property market fares for the remainder of the year. However, it is encouraging to see how equity release is increasingly being recognised as a vehicle to fund property purchases – whether that be indirectly in terms of people helping children/grandchildren with a deposit or enabling older customers to move home themselves.
“Throughout the Covid-19 pandemic, the later life lending market has remained relatively robust and since Q3 2020 the market has steadily been growing quarter on quarter. The fact that it is almost at pre-pandemic levels is a testament to the sector as a whole working collaboratively to keep things moving but also reflects the fact that lenders have continued to innovate to ensure products evolve to meet the changing needs of customers. The total number of products now stands at over 700 with the range of flexible options giving advisers the opportunity to help even more people access the equity in their homes to achieve a wide range of objectives.”
