The number of people making drawdowns from their equity release plans slumped by 21 per cent during 2020, while 10 per cent fewer plans were agreed according to data from the Equity Release Council.
Statistics from the trade body found 28,902 customers made drawdowns from existing plans last year, down from 36,426 in 2019.
Customers seeking further advances, meanwhile, dropped by 11 per cent to 3,749 in 2020.
New customer activity was also down by 10 per cent, at 40,337 new plans agreed.
But the council noted the market bounced back during the last quarter of 2020, with pent-up demand and low pricing boosting the number of new equity release plans.
Separate data in Key’s 2020 market report showed the average equity release interest rate in Q4 2020 was 2.80 per cent, compared to 3.15 per cent in the same quarter of 2019.
New equity release plans agreed per quarter, 2017 to 2020
Source: Equity Release Council
David Burrowes, chairman of the Equity Release Council, said its figures offered “encouraging signs of market resilience after a year that presented huge challenges to household finances and business operations”.
He added: “The unusual patterns of activity in 2020 show some customers biding their time before accessing property wealth. New plans were delayed from earlier in the year and fewer customers have made use of drawdown reserves or sought extensions of existing loans.”
The council’s statistics also showed lump sum lifetime mortgages made up 43 per cent of new plans agreed across the whole of 2020, the largest annual share of activity since 2009 (44 per cent), according to the trade body.
It added this was likely to be influenced by customers with interest-only mortgages reaching maturity.
But Mark Gregory, founder and chief executive at Equity Release Supermarket, said his advisory service had found otherwise.
He said: “While the council considers the increase in lump sum plans in Q4 to be due to more people using their equity release money to repay maturing interest-only mortgages, we are seeing a different picture at Equity Release Supermarket.
“The number of our customers using their money for a house purchase more than doubled in Q4 compared to Q4 19 and we saw a strong uplift in the London market also.
“This points to customers taking advantage of all-time low interest rates on plans and aiming to complete before the end of the stamp duty holiday.”
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