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.
Older homeowners withdrew £698m of property wealth in quarter two this year. The figure in quarter one was £1.065 billion this was almost £400m (34%) more than quarter one.
These consequences of COVID 19 are not surprising, this is the case in point when looking at the wider economy such as data supplied from the Bank Of England.
This data indicated that the gross amount of lending was down by as much as 36% from February and March.
We have found that May was the quietest month for new plans before initial signs of recovery followed in June as lockdown conditions began to ease and physical valuations became possible again.
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.”