It seems the far-reaching effects of the coronavirus pandemic are never ending. The latest casualty is the equity release sector which have fallen in quarter two.
Figures released by Key, have revealed that in quarter two there was a 45% drop in the amount of equity being released and a 27% fall of customers utilising equity release.
Drawing comparisons with quarter 1, Key found that 11,495 customers used equity release. This number dropped to 8,374 in Q2, according.
New equity released dropped from £949 million to £521 million in this time and the total value of plans including reserved drawdown fell from £1.32 billion to £767 million over the same period.
Key said while it thought the decrease may have been caused in part by customers becoming more cautious it also believes servicing challenges faced by the industry would also have had an impact.
Will Hale, CEO of Key, said:
“The unprecedented circumstances the UK and the world finds itself in due to the coronavirus has been reflected in the significant slowdown in the equity release market in the second quarter.
“Whilst the sector has been remarkably resilient in adjusting working practices in the face of lockdown to ensure we can continue to help customers, there are a number of knock on effects from the current pandemic.”
Will Hale, revealed that cases were taking longer to complete, but due to current circumstances customers were being a bit more cautious than normal.
He added:
“At Key, we have certainly been having these types of conversations with customers and really focused on helping people decide whether they have an immediate need or perhaps can wait until society returns to a situation when booking a holiday or age-proofing their home is possible.
“Q1 2020 was very different from Q2 2020 and it is only appropriate that those customers exploring equity release during the time of the pandemic have been focused on shoring up their finances by repaying debt and supporting their wider families rather than looking to spend money on holidays or home and garden improvements.
“Even with the changes that the chancellor recently announced, many older consumers are likely to be extremely cautious about their choices around their spending for the foreseeable future – although we may see an increase in gifting to family members looking to get on, or move up, the housing ladder given the stamp duty holiday.”
