Borrowers refrained from releasing equity in response to the pandemic, with returning drawdown and further advance activity quieter in H2 2020 than a year earlier, according to the Equity Release Council.
In its spring 2021 market report, published yesterday (April 8), the ERC said returning drawdown activity in H2 2020 was “noticeably quieter” than in previous periods with 13,489 customers served, the lowest number in three years.
Further advance activity was also quieter year-on-year, with 2,081 advances agreed in H2 2020, compared to 2,248 in H2 2019.
New plans were also down however, at 21,917 in the second half of 2020, from 23,285 in H2 2019.
Equity release customer numbers: half-year trends
|New plans||Returning drawdown|
|Source: Equity Release Council spring 2021 market report|
Despite a slowdown in new plans taken out, the number of equity release products available rose to record highs with 100 new products added in H2, and a total of 488 products available by the end of 2020.
Stephen Lowe, group communications director at retirement specialist Just Group, said: “Customers are being very well served by a combination of attractive interest rates and increasing numbers of providers and innovative product options.
"We are confident of the market’s prospects as property continues to be a major part of most people’s financial assets and using housing equity is becoming a cornerstone of their retirement planning.”
Claire Singleton, chief executive officer of Legal & General Home Finance, commented: “The boom in choice, flexibility and greater protection for consumers has led to property wealth becoming a more mainstream consideration in people’s retirement planning in recent years.
“While 2020 brought disruption to the equity release market, we’ve also seen lower rates, which clearly make accessing property wealth a more viable option for homeowners who want to remain in their homes, rather than downsize to a smaller property.”
Singleton added: “While greater access to property wealth is a good thing for retirees across the country, we must also be wary of those considering using it for the wrong reasons.
“Covid-19 has had a huge impact on people’s finances and retirement plans, leaving many people vulnerable to financial stress. As an industry we must ensure we are spotting these cases and providing alternative solutions where necessary.”
What do you think about the issues raised by this story? Email us on FTAletters@ft.com to let us know.