The equity release market has seen customer numbers drop as a result of the coronavirus, according to a report by advice firm Key.
Figures from the equity release advice firm showed a 27 per cent decrease in the number of customers using equity release, from 11,495 in the first quarter of the year to 8,374 in Q2 2020.
The data from Key also found a 45 per cent fall in the amount of new equity released, from £949m in Q1 2020 to £521m in the second quarter.
The total value of plans including reserved drawdown also fell, from £1.32bn in the first quarter to £767m in Q2.
Equity Release Value and Volume of Plans
|Q1 2020||Q2 2020|
|Number of customers||11,495||8,374|
|Value of new plans||£949m||£521m|
|Total value of plans||£1.32bn||£767bn|
Will Hale, CEO at Key, said: “The unprecedented circumstances the UK and the world finds itself in due to the coronavirus has been reflected in the significant slowdown in the equity release market in the second quarter. Whilst the sector has been remarkably resilient in adjusting working practices in the face of lockdown to ensure we can continue to help customers, there are a number of knock on effects from the current pandemic.
“Indeed, not only are cases taking longer to complete but it is only appropriate that people are delaying their decision to access their housing equity due to the current uncertainty.
"At Key, we have certainly been having these types of conversations with customers and really focused on helping people decide whether they have an immediate need or perhaps can wait until society returns to a situation when booking a holiday or age-proofing their home is possible."
He added he was confident the market would return to growth by year end and into 2021.
Stuart Wilson, CEO at Air Group, commented: “No sector was going to be unaffected by Covid-19 and the impact of lockdown, and equity release is no different.
"However, despite the anticipated fall in customer numbers and released equity in Q2, we’ve already seen something of a bounce back and it’s clear that later life options are going to be more in demand going forward, especially when you consider that more older customers are utilising products to pay down mortgages and debt much more frequently”.
Mr Wilson added: “What this does perhaps show more than ever is the importance of customers taking professional advice, and weighing up what might be the short-term financial consequences of the pandemic, with longer-term needs and the decisions that they may have to make.
"This is even more important when financial pressures are being felt, when family members might also be feeling the pinch, and where there is a greater chance of individual vulnerability. We need to spread the message far and wide about how older homeowners access advice and the benefits of doing so”.
The advice firm also analysed spending patterns in Q1 and Q2 2020 and found while gifting remained level between quarters at 21 per cent, Mr Hale predicted a potential increase in gifting to family members looking to join or move up the property ladder, following the recent stamp duty cut.