The equity release market saw a “strong” end to the year but is still down on last year, according to a report from specialist adviser Key.
In its market report published today (January 21) Key noted a 12.5 per cent drop in plan sales year-on-year, from 46,247 in 2019 to 40,470 in 2020.
The value of new plans was also down by 4.4 per cent, from £3.6bn in 2019 to £3.4bn in 2020.
The damage was done mainly in the second quarter but the equity release adviser noted a “strong” end to the year, with 9,930 customers releasing £1.1bn in new plans in the last quarter.
Will Hale, CEO at Key, said: “While 2020 is down on 2019, the fact that we have only seen a 4.4 per cent drop in the value of equity released suggests that customer demand remains strong supported by the efforts of advisers, lenders and other service providers in this challenging year.”
According to Key, full year completion numbers may not fully reflect customer demand in H2, as it had still seen extended lag times when compared to ‘business as usual’ conditions.
The adviser said some of this demand was likely to help drive completion volumes in the first quarter of this year.
Mr Hale said it was still difficult to predict when the market would return to more normal trading conditions, despite the national roll-out of vaccinations.
Stuart Wilson, chief executive officer of Air Group, said: “The year clearly ended strongly for the equity release sector and we hope this can continue into the first few months of 2021 and the rest of the year.”
Mr Wilson added he had seen a bounce back and growing demand after the first lockdown had “considerably” affected the sector.
Dave Harris, CEO at lender more2life, added that the strength of the market had been “underpinned” in part by an increase in property values.
Annual house price growth rose to a six-year high of 7.3 per cent at the end of 2020, according to the December house price index from Nationwide.
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