Lump sum equity release plans grew in popularity during lockdown compared with the first three months of the year, according to data from the Equity Release Supermarket.
Figures from the equity release advice firm found lump sum plans accounted for 61.2 per cent of plans across April and May, compared with a share of 56.5 per cent in Q1.
Drawdown plans correspondingly fell in popularity, accounting for a third (33.7 per cent) of plans over April and May, compared with 37.9 per cent in Q1.
According to Mark Gregory, founder and CEO of Equity Release Supermarket, the changes were a potential result of borrowers looking to maximise financial support.
However, Mr Gregory also noted a 6 per cent fall in the average case size in May compared with the first four months of the year, which may have been caused by the shift to desktop valuations by lenders during lockdown, he said.
For example, OneFamily operated an adjusted credit policy, by keeping part of the agreed loan for release until the property value could be confirmed with a physical valuation.
The data from Equity Release Supermarket also found an increase in younger age groups releasing equity. According to the firm, the number of plans taken out by 55-59 year olds had risen by 4 per cent in May, compared with the first four months of the year.
Plans taken out by those in the 60-64 age group also rose, by 3.5 per cent, over the same period, while plans taken out by borrowers between the ages of 65 and 69 had increased by 5 per cent.
Meanwhile, the number of plans taken by those aged between 70 and 74 had fallen by 9 per cent in May, compared with the previous four months.
The advice firm found that the use of equity released had “altered dramatically” in May compared to previous months, as gifting to children accounted for 19.3 per cent, up 7.5 per cent on previous months in the year. Releasing equity to repay debts also rose by 2.5 per cent.
Mr Gregory said while his business was witnessing slower growth during Q2 so far in comparison to Q1, it was not due to a fall in market interest, but “simply a delay in the process due to challenges caused by the pandemic”.
According to Mr Gregory, enquiry volumes at the end of May had increased 16 per cent year-on-year.
Additionally, Equity Release Supermarket reported a marked increase in the proportion of remote advice delivered during lockdown, with 83 per cent of advice having been conducted over the phone during April and May, compared with 55 per cent in Q1.
Mr Gregory commented: “We’ve witnessed the coronavirus reshape the industry in real time and rapidly accelerate digital connectivity and underlying trends. For instance, following the launch of our live video chat capabilities in April, we’ve seen a 17 per cent uplift in the use of this channel throughout May.”
However, separate research from equity release lender More 2 Life found that just one in 10 later life lending advisers thought the lifetime mortgage market would develop a broader range of customer communication options when the industry returns to pre-coronavirus operating models.