A total £1.14bn in property wealth has been released by equity release customers in the first three months of 2021, new figures from the Equity Release Council (ERC) have revealed.

This was a slight dip from the £1.16bn recorded in the fourth quarter of 2020 but represented a 7% year-on-year rise from £1.06bn in Q1 2020.

The figures also showed that 16,527 new or returning customers were served during the first three months of the year, which was down from 19,333 in Q4 2020, with the Council suggested that seasonal trends were “accentuated” by the return of strict lockdown restrictions.

However, the ERC added that overall customer numbers proved “more resilient” than the first UK lockdown of Q2 2020, when just 13,617 new or returning customers withdrew equity from their properties.

ERC chairman, David Burrowes, suggested that despite the ongoing uncertainty over the trajectory of the pandemic, the latest data shows how the equity release market is following a “steady course” in the early months of 2021.

“The market has proven to be robust and applied lessons learned in the first lockdown to maintain access to property wealth for those customers who need it, guided by multi-layered financial and legal advice,” Burrowes commented.

“Decisions to release equity are not made in isolation of wider developments in the property market. The resilience of house prices means that, for many older homeowners, property continues to be the most significant asset at their disposal and a viable route to boosting their income from pensions and savings, or gifting a ‘living inheritance’ to family members for their own use such as for a house deposit.”

The ERC also suggested that product choices remained “consistent” with recent trends, as nearly three in five (58%) new customers opted for drawdown lifetime mortgages – compared to 57% in Q1 2020 – while 42% opted for lump sum lifetime mortgages (43% in Q1 2020).

February also saw the fewest new plans agreed (3,003) since June 2020, with activity cooling for four successive months having reached 4,161 in October 2020. The Council suggested this is likely to be linked to the tightening of lockdown restrictions during this period, with activity beginning to recover again in March, when 3,727 new plans were agreed.

Commenting on the figures, group communications director at Just Group, Stephen Lowe, said: “Momentum usually builds through the year, so it is positive to see such a good start in the first three months.
 
“The market is in the midst of a transformation with more providers offering more varied product features ensuring advisers can personalise solutions to each individual client’s unique requirements.

“The effects of the lockdowns may linger as people reassess their financial circumstances. But looking forward we are confident that the appetite for using housing wealth to support retirement aspirations is set to grow in the years ahead.”

more2life corporate marketing director, Stuart Wilson, added: “Looking ahead, it’s likely that the UK’s vaccine roll-out and the reopening of key sectors will prompt a renewed feeling of confidence in the economy among consumers, which will also feed into the later life lending market.

“This makes it even more important for equity release lenders to be working closely with advisers – and vice versa – so that the later life lending industry is able to meet the rising customer demand that we are likely to see in the coming months.”

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