The number of borrowers over 70 taking out lifetime mortgage deals fell by 9 per cent in May, while demand from younger borrowers increased, according to data from Equity Release Supermarket.

The firm compared applications for equity release in May, when lockdown restrictions eased, to the average for the four months prior to that.

It found there was a 4 per cent increase in plans taken out by 55-59 year olds, a 3.5 per cent increase for 60-64 year olds, a 5 per cent increase for 65-69 year olds and a 9 per cent reduction for 70-74 year olds.

The comparison service also saw a 12 per cent rise in the number of equity release plans taken out by single borrowers.

The growth in equity release use by younger borrowers echoes trends in recent YouGov research which found that over-50s made up 25 per cent of out-of-work claimants.

It also found that 74 per cent of over-65s felt that Covid-19 would have no impact on their finances, compared to 58 per cent of 50-64 year olds.

Equity Release Supermarket also found that the reasons why borrowers are opting to unlock money from their homes have shifted during the pandemic.

The proportion of borrowers intending to gift money to their children has increased from 7.5 per cent to 19.3 per cent. 

The share of borrowers planning to use equity release to pay for holidays fell to less than 1 per cent as travel restrictions have forced Brits to stay at home.

Equity Release Supermarket founder and chief executive Mark Gregory says: “The pandemic has fundamentally changed the world as we know it.

“People are living differently, interacting differently, purchasing differently and in essence thinking differently. 

“We’ve witnessed the coronavirus reshape the industry in real time and rapidly accelerate digital connectivity and underlying trends.

“For instance, following the launch of our live video chat capabilities in April, we’ve seen a 17 per cent uplift in the use of this channel throughout May.”

Gregory adds: “Our business grew by 58 per cent in Q1 of this year, predominantly as a result of post-Brexit confidence returning to the market, and whilst we are seeing slower growth during Q2 so far, this is not due to a fall in market interest but simply a delay in the process due to challenges caused by the pandemic. 

“In fact, at the end of May, our enquiry volumes were up 16 per cent year on year and May alone saw an uplift in enquiries to 29 per cent year on year.”

Gregory says there has been a slight increase in the use of lump sum plans compared to drawdown, which he believes may be the result of borrowers trying to maximise their financial resources in difficult times. 

But he says: “The average case size did fall in May by 6 per cent when compared to the previous four months, which may be due to the fact that lenders had to use desktop valuations to calculate the amounts they would lend during the lockdown given that surveyors could not make home visits.”

Equity Release Supermarket also reported on regional trends with London and the North West recording an increase in applications, growing by 1.6 per cent and 1.4 per cent respectively. 

The South East, South West and Yorkshire all saw a small decrease in applications.

Gregory adds: “The pandemic has no doubt caused the equity release market to slow, but this has only had a short-term effect. 

“Now that lenders can return to home-based valuations, as well as the buoyant enquiry volumes we have gained, I am very confident in the outlook for H2. 

“Lenders responded both quickly and positively to the challenges posed by lockdown and the digital programmes some have put in place will transform our industry.”