The third quarter saw £884m of property wealth released from homes as the equity release market returned to “more normal” trading conditions, according to new data from Key.

The equity release adviser’s Q3 Market Monitor revealed this was a boost from Q2 when just £521m was released after the market was hit by the initial shock of the COVID-19 pandemic, but in line with Q3 2019 when £887m was released. 

Key’s data also revealed that the number of customers has also dropped by 9% year-on-year – from 11,772 in Q3 2019 to 10,671 in Q3 2020 – as clients focused on essential spending such as debt repayment and support for their wider families.
 
Forty-seven per cent of the wealth released (£415m) was spent on clearing debts while 25% (£221m) was used to support family and friends via gifting.

Key’s analysis also showed that around 11% (£97m) of the amount released was spent on home improvements – mainly for age-proofing houses so people can stay in their homes – while just 3% (£26m) was spent on holidays.

“In Q3, we saw a return to more normal market conditions driven by many customers looking to make their finances more robust by reducing their outgoings or supplementing their income,” said Key CEO, Will Hale.

“While the payment holidays offered by big residential lenders have certainly benefitted many, older borrowers who either fear redundancy and a tough climb back into work or early retirement have looked to use equity release to reduce the financial pressure they are feeling.

“Safe in the knowledge that not only are rates at historic lows but through modern flexible equity release plans they can service interest or make ad hoc capital repayments if they so wish to mitigate the impact of roll-up interest.
 
“Others have seen the stamp duty holiday as the ideal time to help younger relatives onto the property ladder and we’ve seen £221m being gifted with much being pumped into the housing market with recipient’s receiving an average of £57,549 to support their dream of owning a home.  The market is maturing and is now very much focused on essential rather than discretionary spending.”

Share Story: