Homeowners accessed £1.06bn of property wealth through equity release in Q1 2020, marking a 14 per cent increase year-on-year, according to the latest figures from the Equity Release Council.
The data published yesterday (April 30) also found that 11,079 new plans were agreed by homeowners aged 55 and over in Q1 2020 - the largest total for any Q1 period since records began in 1991.
This came after the Equity Release Council earlier this month found the average equity release rate fell to a record low of 4.48 per cent in January 2020.
However, while experts predicted earlier this month the equity release market would boom during the coronavirus crisis, Dave Harris, CEO of More2Life, said the market could start to feel the impact this quarter.
He said: “Today’s figures reveal the equity release market started 2020 with signs of strong growth. However, as we start to move through Q2, the landscape has become drastically different.
“The coronavirus pandemic has seen the average equity release customer self-isolating and the industry considering how it can maintain safeguards while still supporting those who need equity release.
“Continued collaboration amongst funders, lenders and trade bodies to ensure that the solutions customers need during these uncertain and challenging times are available is needed."
Drawdown products remained the most popular type of new equity release plans agreed in the quarter, albeit with a lower share (51 per cent) than a year earlier (64 per cent), with the number of new drawdown plans totalling 6,267.
On new drawdown plans, the average value of a first instalment stood at £68,492, and an additional £39,214 reserved for future use.
Returning drawdown customers also increased due to the products’ popularity in recent years, with 9,805 returning customers making use of drawdown facilities.
Meanwhile, lump sum lifetime mortgages made up 43 per cent of new plans arranged in Q1 2020 - an increase from 36 per cent in Q1 2019.
Alice Watson, head of marketing, insurance at Canada Life, said most valuation partners had withdrawn on-site valuation services towards the end of March, “so while Q1 was largely unaffected by the coronavirus pandemic, we will start to see the impact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."
However, many equity release lenders have already changed their valuation processes and switched to remote valuations as a result of restrictions on physical property valuations during the lockdown.
Mr Harris added: "It will also be crucial for the wider industry to help equip advisers with more tools, support and ‘know how’ to ensure that they can continue offering the highest-quality service to these customers.
“There is no doubt in my mind that equity release will play a vital role in supporting many people’s finances now and in the future but this can only happen if we learn from the challenges we are facing now.”