The Equity Release Council has reported that over-55 homeowners accessed £1.17bn of property wealth in Q2 2021. This was up 2% from £1.14bn in Q1 2021 and up 67% year-on-year from Q2 2020 during the first Covid-19 lockdown.
A total of 20,270 new and returning customers were served between April and June as the market edged back towards pre-pandemic levels of business. This is a rise from 16,527 in Q1 2021 and 13,617 in Q2 2020 when households and employers were adjusting to pandemic conditions. The latest figure compares with an average of 21,036 customers served per quarter in 2018 and 2019.
Returning drawdown activity made the strongest recovery of any segment compared with Q2 2020 with customer numbers up 67%, having been the most subdued part of the market during the pandemic.
Customers agreed 9,898 new equity release plans in Q2 2021, slightly down from 10,030 in the previous quarter. This latest figure was the lowest since the first lockdown of Q2 2020 saw just 7,341 new plans agreed but remained broadly in line with the quarterly average for the first year of the pandemic (9,822).
Drawdown lifetime mortgages remained the most popular option with new customers (55%), while 45% opted for a lump sum lifetime mortgage.
June was the busiest month for new plans agreed during Q2 (3,348), and the first month for more than a year that saw more lump sum than drawdown plans agreed (1,726 vs. 1,621). This 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 deadline in June, or using equity release to move home themselves.
The average first instalment of a new drawdown lifetime mortgage was £86,349, reduced by 4% from Q1 (£89,758). The average new lump sum lifetime mortgage edged up slightly by 5% from Q1 to reach £129,558, with this increase likely to be influenced by increasing property values and instances of gifting in advance of the Stamp Duty deadline.
David Burrowes, chairman of the Equity Release Council, 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 back 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.”