Older homeowners released more than £3.4bn in property wealth last year, according to new data published by Key.

The figures revealed that 9,930 people released more than £1.1bn in the fourth quarter of 2020 alone.

However, the data also showed that on an annual basis, there was a 12.5% decrease in plan sales – with 40,470 in 2020 dropping from 46,247 in 2019 – as customers focused on “meeting pressing needs rather than discretionary spending”, Key said. The equity release specialist also recorded a 4.4% reduction in the amount released over the year – dropping from £3.595bn in 2019 to £3.456bn in 2020.

Key stated that the trend towards homeowners using equity release to refinance debt and support their wider families via gifting also saw the average amount released increase over the year. The average amount released saw a 9.2% climb from £77,735 in 2019, to £84,919 in 2020.

Key CEO, Will Hale, said: “While 2020 is down on 2019, the fact that we have only seen a 4.4% drop in the value of equity released suggests that customer demand remains strong supported by the efforts of advisers, lenders and other service providers in this challenging year.

“Discretionary spending has fallen as equity release increasingly looks to support clients’ aspirations to help their families and make their finances as resilient as possible by refinancing debt.

“With the end to the stamp duty holiday on the horizon, it is also not entirely surprising to see that many older homeowners have taken the opportunity to pass wealth down the generations and help children or grandchildren onto the property ladder.  While this may change as we head in 2021 and the holiday comes to an end, I suspect the desire to help families will remain a strong driver of this market in years to come.”

Key’s data emphasised that Q2 was the low point for the market in 2020 as the first lockdown hit the UK. The quarter only saw 8,374 plans taken out which was a 45% quarterly fall.

However, Key also highlighted that the stronger figures it recorded later in the year was down to advisers, lenders and service providers rolling out new processes and customer’s confidence increasing.

Commenting on Key’s latest data, more2life CEO, Dave Harris, said: “We all know 2020 was a challenging year but these figures suggest that the later life lending sector as a whole weathered the storm and entered 2021 in a strong position.

“This has only been achieved by the combined efforts of the industry as we worked to put customers, and the advisers who support them, first. Product innovation is vital for this and while there are now 459 equity release products on the market, we firmly believe that there is still room for growth and innovation in this sector which we are keen to lead.”

Air Group CEO, Stuart Wilson, added: “While lockdown one impacted the sector considerably, since then we have seen a bounce back and a growing demand. Advisers will remain at the heart of this sector and we will be supporting them to ensure they have access to as many product options as possible, and they have the best tech and resources to advise this growing customer demographic.”

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