There were 40,337 new equity release plans agreed in 2020 compared to 44,870 in 2019, the Equity Release Council has revealed.

The ERC points to 11,566 new plans agreed in the final three months of 2020, some of which were decisions made earlier but put on hold as the Covid-19 crisis played out, as proof of sector resilience in a turbulent year.

The final number of new and existing customers served across 2020 came to 72,988 while total lending to new and existing customers came to £3.89bn – £1.16bn of which was accessed in the final quarter of the year.

In 2019 saw £3.92bn worth of equity released.

In terms of borrower activity, the ERC says that lump sum lifetime mortgages made up 43 per cent of new plans agreed in 2020, the largest proportion of this type since the 44 per cent noted in 2009.

This, it says, like “likely to be influenced by customers with interest-only mortgages reaching maturity.”

And despite there having been 10 per cent fewer plans agreed compared to 2019, 11 per cent fewer borrowers looking for a further advance and 21 per cent fewer making drawdowns from existing plans, there was growth elsewhere.

The average new lump sum lifetime mortgage in Q4 2020 grew 3 per cent, to £104,501 while the total plan size of drawdown lifetime mortgages taken out by new customers increased by 7 per cent to £81,724 as an initial amount and £33,511 held back.

The ERC adds that the average equity release interest rate fell to 4.01 per cent during Q4 2020, with the lowest rate at 2.30 per cent.

Equity Release Council chairman David Burrowes says: “These figures offer encouraging signs of market resilience after a year that presented huge challenges to household finances and business operations.

“Over the last decade, releasing equity to boost your finances in later life has grown from a niche pursuit to a competitive market that has stabilised at £3.9bn of lending activity for the last three years, despite significant headwinds driven by Brexit uncertainty and the Covid-19 pandemic.

Equity Release Supermarket founder and chief executive officer Mark Gregory adds: “While the council considers the increase in lump sum plans in Q4 to be due to more people using their equity release money to repay maturing interest-only mortgages, we are seeing a different picture at Equity Release Supermarket.

£The number of our customers using their money for a house purchase more than doubled in Q4 compare to Q4 19 and we saw a strong uplift in the London market also. This points to customers taking advantage of all-time low interest rates on plans and aiming to complete before the end of the stamp duty holiday.

“The strength of the London region is often seen as a bell weather of the state of the wider market and we are seeing this buoyancy continue into January, which gives us confidence that the equity release industry will enjoy resilient growth in 2021.”