A total £3.89bn in property wealth was unlocked over the course of 2020, new statistics published by the Equity Release Council (ERC) have revealed.

Compared to previous years, this total figure was down from £3.92bn in 2019, and £3.94bn in 2018.

The ERC said the disruption of the COVID-19 pandemic saw 57% of lending activity concentrated in the first and final quarters of 2020.

The data indicated that a backlog of cases from earlier in 2020 contributed to a busy fourth quarter, as 11,566 new equity release plans were agreed by over-55 homeowners. October saw the most cases completed as the market bounced back from the initial spring lockdown, and the total amount of property wealth unlocked by new and returning customers reached £1.16bn in Q4.

ERC chairman, David Burrowes, suggested the figures offer “encouraging signs of market resilience” after a year that presented challenges to household finances and business operations.

“The unusual patterns of activity in 2020 show some customers biding their time before accessing property wealth,” Burrowes said.

“New plans were delayed from earlier in the year and fewer customers have made use of drawdown reserves or sought extensions of existing loans. Releasing equity is not an overnight decision and should only be entered into after considering all alternatives.

“Ten years of transformation have made equity release an important financial planning tool that is increasingly valued by our ageing population.”

During the nine months from April to December, new customer volumes broadly reflected levels last seen in 2017, with 29,258 new plans agreed.

The ERC also revealed the number of new and returning customers served in Q4 reached 19,333, to leave the annual total at 72,988. With new customer activity for 2020 down 10%, the figures showed that returning drawdown and further advance activity was the most subdued year-on-year – down 21% and 11% respectively.

Legal & General Home Finance CEO, Claire Singleton, commented: “Today’s figures show that property wealth is playing an increasingly important role in people’s retirement planning and, while there was an expected dip in applications following the first national lockdown in March, we can now see that this led to pent-up demand, and a significant uptick in cases, later in the year.

“Low rates are clearly playing a part, but we’ve seen property wealth become a more mainstream consideration in people’s retirement planning in recent years and, as a result, there has been growth in the later life lending market, giving customers greater choice and flexibility, along with competitive rates.”

The statistics also showed that 59% of new customers opted for drawdown lifetime mortgages in Q4, down slightly from 61% a year earlier.

Lump sum lifetime mortgages made up 43% of new plans agreed across the whole of 2020, which was the largest annual share of activity since 2009 (44%) and likely to be influenced by customers with interest-only mortgages reaching maturity, the ERC said.

The average new lump sum lifetime mortgage agreed in Q4 was £104,501, an increase of 3% from Q4 2019 (£101,058).

“The strong demand from new and existing customers highlights the importance of the use of housing equity in supporting customers through later life,” Key CEO, Will Hale, added.

“Importantly, competition from providers meant average rates fell with the lowest rates at 2.3%, fixed for life, which is less than the average 10-year fixed-rate mortgage.

“One size does not fit all and we find that less than one in five of those who approach us end up taking out equity release and instead may look at downsizing, retirement interest-only mortgages, other later life lending products or they may simply decide to defer any decision for further down the line.

“Specialist advice is vital for ensuring customers look at all their options and the industry needs to continue to evolve into a true later life lending market and we must better communicate the opportunity provided by the innovative products and flexible features now available.”

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