Experts have their say on the Council’s Q3 data

Industry leaders have had their say on the Equity Release Council’s Q3 market statistics. The report shows the number of new equity release plans agreed (10,351) increased by 41% from the previous quarter as national lockdown conditions were eased. To read the full report CLICK HERE

David Stevens, director of savings at retirement, LV=, said: “It is good to see that the equity release market is recovering from the lockdown of early spring. Although this quarter’s figures are lower than last year’s LV=’s research indicates that a growing number of wealth consumers are recognising that equity release is one option when it comes to funding retirement.

“LV= is continually reviewing the way we write equity release business following the coronavirus outbreak and are doing all we can to help advisers and customers complete applications. Applications normally requiring signatures are accepted with either a verbal or email consent. We have also launched Desktop valuations, which will allow   customers to access lending while surveyors are unable to visit properties.”

Alice Watson, head of marketing, insurance, said: “The figures should be reassuring and encouraging for the industry as we see activity surge by 38% when compared to the previous quarter. This brings us close to the level of activity we were accustomed to before the pandemic. New business has also grown by 41% which shows the resilience of the market and also the genuine service equity release can provide for thousands of homeowners across the country.

“The effects of coronavirus are stretching personal finances across the country and I expect that this growth in equity release activity will continue as more people consider accessing their property wealth to finance home improvements or support the day-to-day costs of living.”

Claire Singleton, CEO of Legal & General Home Finance, said:  “Lockdown was a huge challenge, both for consumers and the industry, leading to the significant drop in plans we saw early this year. The figures highlight that the initial fall in activity was largely down to uncertainty caused by the pandemic, rather than a lack of consumer appetite. As the industry adjusted to new working conditions, and consumers slowly tried to get back to normality during the summer, customer numbers, and lending activity, picked up alongside this.

“We are unlikely to see the full impact of the pandemic on retirement planning for some time, but we do know, from our research, that a significant number of people approaching retirement age are re-assessing their plans. Many of this group have considerable property wealth, and we could see a rise in activity as they consider accessing it to allow more flexibility in their planning, or simply to improve later life living standards.

“While this may be the right path for some, homeowners should remember that equity release is a long-term product, rather than a short-term fix. The industry has put a strong focus on protecting vulnerable customers, and we urge people to take time  to consider their options and to ensure they have an open conversation with a financial adviser before making any decisions.”

Dave Harris, CEO more2life, said: “The hard work of key players in the equity release market over the past quarter has gone a long way in stimulating activity post-lockdown, as the figures highlight. It is encouraging to see that, despite the disruption caused by Covid-19, over 10,000 new plans were agreed in Q3, a 41% rise on the previous quarter, and that new customer activity is more closely echoing that of the pre-coronavirus market. The sector has adapted to the challenges of the past six months and is in a strong position to continue serving older borrowers including those who may find themselves impacted by the crisis.

“While all choices around housing equity need to be made taking into account both a client’s long-term and short-term needs, it is crucial that people realise that they can use their housing equity at the moment if they need to.  Adviser support will be key here, and it will be up to lenders to ensure that engagement and education for the intermediary community is at the top of the agenda so that they are able to help older clients with some of the more difficult financial choices they may need to make.”

Will Hale, CEO of Key, said: “The Equity Release Council’s Q3 figures underline our belief that the early signs of a bounce back in the market in June were sustained throughout the summer with September seeing the busiest month for new customers. The £963 million of property wealth unlocked during the three months is only slightly down on the same period last year.

“Summer saw the easing of coronavirus restrictions across most of the country and that coupled with pent-up demand helped contribute to the much stronger performance compared with the second quarter of the year.  Continued low rates, further product innovation and advisers adapting to remote working models will help support customer demand through the rest of the year and into 2021 even though coronavirus uncertainty and restrictions look likely to remain with us for some time.

“Older homeowners sensibly remain cautious and now is certainly not the time to be making snap decisions around using housing equity.  However, consideration of property wealth is becoming a central part of financial planning in later life and with pensions and other savings unlikely to be able to support the wants and needs of many people in retirement equity release has an increasingly important role to play.”

David Burrowes, Chairman of the Equity Release Council, said: “These figures show a steady return to something closer to normal activity over the summer, after the market weathered the initial impact of Covid-19. With the country experiencing a break from lockdown, the pick-up was helped by a mix of new enquiries and delayed cases from earlier in the year.

“Equity release is a carefully considered choice, and this year’s unprecedented events make it more important than ever for people to weigh up their decisions through regulated financial advice, independent legal advice and conversations with those closest to them.

“Despite the uncertain climate, the market has adjusted well to the challenges of operating safely in a pandemic. Desktop property valuations have been used selectively, solicitors have taken extra steps to maintain consumer protections when advising remotely, and product pricing has remained competitive.

“Looking ahead, the key market drivers remain in place: people are living longer and retirement finances are increasingly squeezed as generous final salary pensions edge further to extinction. Many older households are already facing a situation where their expenses outweigh their disposable income, which makes access to property wealth an important pillar to support later life living standards.”