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Equity release activity nears pre-Covid levels with 41% rise

Written by: Shekina Tuahene
There were 10,351 new equity release plans agreed in Q3, up 41% from the previous quarter as extended pipelines edged into the period.

The market statistics for Q3 released by the Equity Release Council showed despite the sector’s recovery from the property market lockdown, agreed plans remained 9% below what they were during the same period last year. 

Additionally, this period was the second slowest quarter since Q1 2018. 

Over the six months to September, a total of 17,692 new plans were agreed, compared with 22,150 last year and 23,311 during the same period in 2018. On the same period last year, this was a 20% decline. 

New customer activity steadily rose over the quarter, with July seeing 3,147 new plans agreed followed by 3,228 in August and 3,976 in September. 

Overall, the equity release market served 18,154 new and existing clients during Q3, up 33%t from the 13,617 served in Q2. However, the sector’s clientele failed to reach levels seen last year as it was down 18% on the 22,131 customers served during the same period in 2019.  

The value of equity released also rose in Q3 by 38% with a total of £963m accessed. This was just marginally down from the £989m released last year.  

Average loan values up 

Of the 4,545 new lump sum lifetime mortgages taken out in Q3, the average loan size remained stable at £99,691, an annual increase of 4%. 

The average loan size of the 5,806 new drawdown plans taken out was £70,244, up 2% on Q2 and an 11% annual rise. 

The average amount reserved for future use was recorded at £34,877, down 7% on the previous quarter and a fall of 6% year-on-year.   

Some 6,697 existing equity release customers continued to take extra drawdowns from their agreed reserves, a rise on the 5,608 in Q2. However, this was still down 30% on last year.  

The average drawdown instalment withdrawn was £11,424, down 12% on the previous quarter but stable on the £11,169 average seen last year.  

Further advance activity recovered to the levels seen last year at 1,106, rising from a low of 668 in Q2 when the property market was put on hold. 

David Burrowes, chairman of the Equity Release Council, said: “These figures show a steady return to something closer to normal activity over the summer, after the market weathered the initial impact of Covid-19.  

With the country experiencing a break from lockdown, the pick-up was helped by a mix of new enquiries and delayed cases from earlier in the year. 

“Looking ahead, the key market drivers remain in place: people are living longer, and retirement finances are increasingly squeezed as generous final salary pensions edge further to extinction.  

Many older households are already facing a situation where their expenses outweigh their disposable income, which makes access to property wealth an important pillar to support later life living standards, he added. 

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