It’s vital to stay up to date with the latest equity release news, so you don’t miss out on the best deals out there!
With annual lending of £3.89bn in 2020, the equity release industry is booming. 2021 appears to be another potential record-breaking year thus far, with over 10,000 new plans already being taken out. The question is, will these statistics hold?
You’re probably wondering how COVID-19 and lockdown restrictions have impacted the equity release market?
We’re here to help you discover:
- An in-depth statistical analysis of the equity release market in 2021.
- The impact of the Covid-19 pandemic on the property and equity release sectors.
- A statistical evaluation of the 2021 property market.
Are you wondering how the equity release market is fairing right now? Let’s find out 10 equity release statistics RIGHT NOW!
Has Covid-19 Effected Equity Release Statistics?
Like all industries, lockdown restrictions have definitely had an overall impact on equity release statistics. If you look at the figures, you’ll note that fluctuations and dips within the market are clearly in line with the relaxation and tightening of lockdown over the past year and a half.
Luckily, the equity release industry is not another Covid-19 casualty. Let’s take a look.
1. Property Value Dipped Slightly 2021
The total value of property wealth accessed by homeowners over 55 dipped slightly from £1.16bn in Q4 2020 to £1.14bn in Q1 2021.
Fear not, it’s been predicted that the total value will rise again to £684bn in 2021, and continue rising for, at least, the next 3 years.
2. 16,527 New or Returning Customers Released Equity in First 3 Months of 2021
This was down from 19,333 in Q4 2020, with average seasonal trends accentuated by the return of tighter lockdown restrictions.
3. 13,617 New or Returning Customers Withdrew Equity From Their Properties
Q1 2021 was the quietest start to a year for total customers served since Q2 2017, while the 5,566 returning drawdown customers were lower than at any point in the last 4 years.
4. 10,030 New Plans Have Been Agreed in 2021
This is slightly down from 11,566 that plans that were signed at the end of 2020.
However, it should be noted the Q4 total was likely magnified by delayed cases filtering through from earlier in 2020 after the first lockdown was lifted.
5. February Saw the Fewest New Plans Agreed to Since June 2020
The total amount of new plans unlocked in February 2021 was a mere 3,000. With activity cooling for 4 successive months, they reached 4,161 in October 2020.
This is likely linked to the tightening of lockdown restrictions during that period, as things were looking up again in March when 3,727 new plans were agreed.
6. The Average First Installment of a New Drawdown Lifetime Mortgage Reached £89,758
Member feedback suggests that increasing loan sizes can be attributed to a range of factors, including:
- Customers taking advantage of having more significant equity at their disposal as a result of rising property prices.
- Greater interest in releasing equity from wealthier customers with more valuable homes.
- Fewer customers using property wealth to fund smaller lifestyle purchases such as holidays during the pandemic, which would normally reduce the average loan size.
- More focus on repaying existing mortgage debt and gifting to family members to support their financial goals during this challening time. This includes making house purchases while the current Stamp Duty1 holiday is available.
7. 2021 has seen 5,566 Existing Customers Make Use of Their Agreed Reserves
These refer to customers with a drawdown lifetime mortgage.
This has been down 18% quarter-on-quarter and 25% year-on-year, as consumers acted conservatively rather than rushing to withdraw extra funds.
These figures are likely due to the uncertainty that comes with a shakey Covid-19 economy.
8. The Average UK Property Owner Held Equity of £189,549 Alongside an Average Loan of £61,951
This is an increase of £12,000 in equity and a decrease of £179 in the average loan balance over the last year.
As interest rates may rise, this trend will likely continue unless significant changes to LTVs2 or increasing property values.
9. While Plan Sales Drop 9.5%, Total Value Released Increases 12.8%
To put things into perspective, the total value released was £222.95 million in Q1 2016 instead of £253.42 million over the same time frame this year.
This being a total increase of 12.8%.
10. Covid-19 Hits Volumes as Customers Numbers Fall by 27%
The pandemic, which caused widespread illness and lockdown restrictions in the UK and worldwide, has negatively impacted the global economy.
The crisis has had a knock-on effect on the equity release market in 2021, as sales volumes were 27% lower than in the same quarter of 2020.
What Do These Statistics Mean for the Equity Release Market?
Despite the global economic effects of Covid-19, the equity release industry is still holding its own. Any drops in figures will likely recover when the world goes back to normal.
With over 1-million UK residents needing to postpone their retirement due to Covid-19, more and more people are looking for ways to supplement their income in search of the means to retire stress-free.
Interestingly, 55% of all homeowners in the UK are over the age of 55. In addition, almost 90% of low-income earning pensioners own their homes. If you’re in that category, then you’re very likely considering equity release as a means to get by, particularly during these difficult Covid times.
The continuous thrive of the equity release market can likely be attributed to it being a financial support tool available in this challenging economic climate.
What Are Equity Release Statistics?
These statistics are the collection and analysis of quantifiable data relating to the equity release market.
Where Are These Statistics From?
The 2 major sources for up to date statistics are the Equity Release Council (ERC) and the Financial Conduct Authority.
How Are These Statistics Collected?
Equity release statistics combine data from all the UK’s Equity Release providers, who maintain accurate records.
What Industries Would Be Interested in Equity Release Statistics?
The financial industry (including banks) and insurance companies might find this information interesting. They could use it to predict future demand for products and services or decide which areas in the market may need more investment.
While COVID-19 has most definitely impacted the equity release industry, it’s safe to say that the sector is still booming. The great news is that the number of customers opting for equity release is set to rise by more than 10% compared to 2020.
With people living longer on average, there is little wonder why this figure has increased so dramatically. While equity release does have its pitfalls, with the rising cost of living, it could be the perfect way to help UK retirees relax in their golden years. To find out more, get in touch with an independent financial adviser today!