“Today’s Equity Release Council Q1 2020 figures highlight the extent of customer demand and the potential for growth”
The equity release market was on track for a record quarter before the Covid-19 crisis hit in March, the latest figures from the Equity Release Council show.
£1.06bn of property wealth was accessed in Q1, up by 14% from £936m a year earlier and less than 2% below the £1.08bn released in Q4 2019.
Additionally, Q1 saw a 2% increase in new plans agreed to 11,079. Both the number of new plans and the total amount of property wealth unlocked saw the largest total for any Q1 period since records began in 1991.
David Burrowes, chairman of the Equity Release Council, said: “These figures reflect the return of consumer confidence to the broader UK economy at the start of the year, after December’s election promised to restore certainty before coronavirus took hold.
“Pent-up demand from 2019 meant homeowners continued to look to property wealth in growing numbers for later life finance in January and February, backed by strong consumer protections and increasing product flexibility.
“As the nation has since adjusted to life under lockdown, the market has adapted to find solutions for the safe provision of advice and valuations, enabling customers to chose the option of equity release while respecting social distancing guidelines.
“Equity release is a carefully considered choice made by weighing up both short- and long-term needs through a detailed financial and legal advice process.
“Beyond the current uncertainty, property wealth will continue to play an important role as part of a multi-asset approach to meet financial needs in later life.”
Alice Watson, head of marketing at Canada Life, commented: “It’s great to see that the equity release market grew 14% year-on-year; the industry was in a strong position at the start of what is going to be an unusual year. The majority of valuation partners withdrew onsite valuation services towards the end of March, so while Q1 was largely unaffected by the coronavirus pandemic, we will start to see the impact throughout Q2 and Q3.
“Equity release is – and will continue to be – an important consideration for those looking at holistic retirement solutions, and while the current situation may delay some cases, we’re still processing new applications every day. It’s great to see that the equity release industry has pulled together to deliver solutions for advisers and their clients during this period, and I’m confident that as we are eased out of lockdown and valuers get back on the road, the industry will revert to growth.”
Will Hale, CEO at Key, added: “Today’s Equity Release Council Q1 2020 figures highlight the extent of customer demand and the potential for growth as, after an uncertain 2019, confidence had started to return to the market before the onset of the coronavirus crisis.
“Despite the current uncertainty, the total number of customers served has remained steady and there was even a modest year-on-year increase in the number of new plans agreed in the first three months of the year. This clearly demonstrates that the equity release market is meeting a growing need for later life lending with £1.06 billion of property wealth released in the quarter.
“While the ‘new normal’ will undoubtedly have an impact on the market, we have seen the entire industry step-up to help customers with developments such as semi-automated valuations, telephone-based advice and a more flexible approach to providing independent legal advice.
“Good specialist advice is crucial and that may mean recommending customers do not proceed at this time. We believe that helping customers to make choices that will stand them in good stead for the long term – especially when there is so much uncertainty at the moment – is the only correct approach.”