You are here: Home - Retirement - Retirement planning - News -

Equity release market halves

0
Written by: Shekina Tuahene
15/07/2020
Economic uncertainty has hit the equity release market as the amount of new transactions dropped 45% to £521m in Q2.

Furthermore, the market saw a 27% decline in customers to 8,374 clients.

According to the Key Market Monitor, the previous quarter serviced 11,495 customers and the amount of equity released reached £949m. 

The total value of plans including reserved drawdown fell from £1.32bn in Q1 to £767m in Q2.  

The overall £1.47bn equity which was released from properties in Q2 was mostly driven by activity in the first quarter, Key said. 

Yearly changes 

Low volumes seen in the second quarter of 2020 impacted on the year’s H1 figures. The number of plans taken out fell 10% to 19,870 from the same time last year when 22,216 plans were taken out. 

Compared to the first half of 2019, the total value of property wealth released fell 12.6% to £1.47bn in H1 2020 from £1.68bn. 

The total market including unused drawdown facilities was worth £2.04bn in the first six months of 2020 compared with £2.38bn. The value of reserved drawdown fell to £624m in the first half of this year from £706m in the first half of 2019. 

The average loan amount fell slightly in H1 2020 to £74,014, from £76,064 during the same period last year while the average property value increased slightly to £321,209 from last year’s £318,571.  

Product mix 

Across the six months, 72% of plans taken out were drawdowns while 28% were lump sum mortgages.  

During H1 2020, there were an average of 387 products on the market with 41% allowing interest repayments and 63% allowing ad hoc capital repayments.    

Will Hale, chief executive 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 knockon 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. 

“That said, demand has remained strong as more customers look to explore how housing equity could help support them in later life and, as we move to more normal trading conditions, we are confident that these macro drivers will ensure that we will return to growth by year end and into 2021, Hale added. 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Premium Bonds winner cheques to be scrapped: Act now

NS&I will be phasing out cheques paid to winners from December, instead paying prizes direct to customers’...
Premium Bonds winner cheques to be scrapped: Act now

NatWest launches regular savings account paying 3% interest

NatWest has launched a Digital Regular Saver offering 3% in a bid to get customers in the habit of putting mon...
NatWest launches regular savings account paying 3% interest

Furloughed and self-employed receive £50bn in government support

The government has handed out nearly £40bn to cover furloughed staff wages while grants for the self-employed...
Furloughed and self-employed receive £50bn in government support

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
VAT reduction kicks in for tourism and hospitality firms

Meals out, hotels, and trips to theme parks and zoos should all become cheaper from today.

Close