COVID-19 & Equity Release

COVID-19 Has Shifted Equity Release Borrowing Priorities: Here’s How
You Must Be Wondering How COVID-19 Has Shifted the Equity Release Industry & Borrowers’ Priorities? You Won’t Believe the Significant Change. Here’s the Scoop!

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COVID-19 has had an unprecedented impact on our global population, and you won’t believe how the equity release industry has shifted.

Despite the tragic medical and economic consequences, society is finally rising beyond the confines of COVID-19, and there’s been a big change in how we do business.

Pressure on the global economy has meant that businesses worldwide have had to adapt their operational processes to survive.

The big question is: How has COVID-19 shifted equity release borrowers’ priorities and the industry as a whole?

The answers lie in the following topics we’ll uncover:

  • The results of a survey by Masthaven Bank on lending priorities in a post-COVID world.
  • Has Coronavirus propelled or hindered the equity release industry?
  • What is the post-COVID future of equity release?

At SovereignBoss, we’re all about you.

As a leading equity release advisory portal, our editorial team’s responsibility is to keep you up-to-date with the industry trends.

As we hang up our masks, it’s important to analyse industry changes to be prepared for the future.

Luckily for the equity release sector, the news is good.

Let’s take a look!


How Has COVID-19 Impacted the Equity Release Industry?

While COVID-19 has had little effect on the Equity Release industry,

Despite hard lockdown placing some strain, customer priorities have shifted since the start of the pandemic.

Furthermore, plans are more flexible, and the industry is historical setting records.

COVID-19 Has Shifted Borrowers’ Priorities

In a recent study conducted by Masthaven Bank,1 186 brokers were surveyed, and an interesting shift in customer priorities was noted.

Check this out!

  • 8 out of 10 brokers, the equivalent of 79% Believed that flexible lending criteria is the biggest priority for homeowners living in a post-COVID world. More so than prior to the pandemic. What this means is that citizens with financial challenges have more chance of successfully qualifying for products that has compulsory repayments like a retirement interest-only mortgage.
  • 28% of brokers – Said that COVID-19 is going to have a further negative affect on the financial standing of borrowers throughout 2022. This will include customers who opted for mortgage payment holidays, government job support schemes, and individuals with furloughed mortgages.
  • 19% of brokers – Expect business from borrowers with poor credit history. This is likely due to the FCA’s petition for banks to relax affordability criteria2 for products that require checks. Most lifetime mortgages and home reversion schemes have no affordability checks.
  • 56% of brokers – Advised that borrowers now want speedy service more so than in pre-COVID times.
  • 54% of brokers – Believe that customers now want flexible product features.
  • 52% of brokers – said that excellent customer service is now more of a priority for borrowers.
  • 26% of brokers – Only a small percentage advised that interest rates are now more important, making them lower priority than other factors. This is likely because interest rates3 hit a historic low last year so steep rates are no longer a concern for borrowers. However, interest rates are predicted to slightly climb during 2022.

Record-Breaking Industry Growth

While there was a slight dip in numbers during the beginning stages of hard lockdowns,

As homeowners had less access to lenders, the industry set a record high in 2021.

Statistics show that over 4.8bn in equity was released last year, and 80% of lenders see further growth on lifetime mortgages and home reversion plans in the coming year.

Equity Release Plans Are More Flexible

This growth has brought about a huge shift in the industry, with numerous new and flexible products constantly hitting the market.

2021 saw more new equity release plans than ever before, with over 750 plans now available for you to browse.

Now more than ever, a whole market financial adviser will be useful.

What’s more, lenders now offer more free services (advice, valuations, no completion fee),

And a recent breakthrough has announced that lenders must allow homeowners to make partial annual repayments of their loans.

Another great service initiative that has stemmed from COVID-19 is digital appointments, where customers no longer need to leave their homes to meet with advisers and brokers.

This flexibility alleviates the challenges of travelling, especially for the older generation seeking equity release plans.

So, Did Coronavirus Drive the Equity Release Forward?

Yes, Coronavirus has driven the Equity Release industry forwards. More money is being unlocked, and plans are more popular than ever.

Why Is Equity Release More Popular than Ever?

The equity release industry is more popular than ever because more retirees seek financial security in a volatile economy.

Furthermore, it’s easy to arrange, returns on savings and annuities are currently poor, there are endowment mortgage shortfalls, and interest rates are at a record low.

There’s more to discover:

  • Tough economic times – More retirees are looking for ways to survive economically in a difficult financial climate. With one global crisis to the next, the economy is clearly volatile.
  • Safe and easy to arrange – An equity release plan takes just 4 to 12 weeks to come through and your financial adviser will guide you throughout the process. Plus, the Equity Release Council ensures that borrowers are protected.
  • Relatively poor returns seen on savings and annuities – Retirement savings are significantly less than many expected, but equity release provides a tax-free form of relief.
  • Endowment mortgage shortfalls – Equity release is a solution for those who have no additional means to pay off their home loan. It can save older homeowners from risking foreclosure.
  • Low interest rates – These mean that plans are cheaper than ever as interest is fixed for life.

What Does the Future Hold for Equity Release?

The future of equity release shows further growth, according to 80% of lenders.

However, with interest rates hitting an unprecedented low in 2021, there will likely be a slight increase moving forward.

With the FCA and Equity Release Council on their mission to improve the industry, borrowers can expect to see better deals, further exciting innovations, and more new products.

How Do These Shifts Impact Existing Customers?

The shifts in the equity release industry mean that existing plan holders should review their plans.

If you unlocked equity before 2020, likely, you could now find lower interest rates and a more flexible lifetime mortgage loan.

You can chat with your financial adviser about this review process.

In Conclusion

While lockdown is a distant memory, the effects of COVID-19 remain.

Now, more than ever, we have seen unprecedented shifts in the financial industry, leading to a new wave of innovation and growth, especially seen in the equity release sector.

More and more lenders are now offering greater flexibility, giving homeowners over 55 the chance to unlock the equity in their properties.

So, if you’re over 55, cash strapped but own a home, then a lifetime mortgage or home reversion scheme could be the answer you’ve been looking for.

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Editorial Note: This content has been independently collected by the SovereignBoss advisor team and is offered on a non-advised basis. Sovereignboss may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. Learn more about our editorial guidelines.

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