The most common type of new plan agreed were drawdown lifetime mortgages (55%), although more customers took out lump sums in June before the £500,000 stamp duty holiday ended
In total over-55 homeowners unlocked £1.17bn of property wealth during Q2 2021, up 2% from Q1 (£1.14bn) and up 67% (£698m) since a subdued Q2 last year during the first COVID-19 lockdown.
David Burrowes, chairman of the Equity Release Council, said: “Judging by these latest figures, the equity release market is showing signs of stability and durability as the option to access property wealth opens doors for thousands of people to pursue their financial goals.
“We were accustomed to more than 20,000 new or returning customers releasing equity each quarter in the two years before COVID-19 struck. We’re now seeing activity levels steadily returning back to that status quo, with some existing customers returning to make withdrawals that were put on hold last year.
“The gradual recovery suggests people are carefully weighing up their circumstances and long-term needs, helped by specialist financial and legal advice, with speculation about a spike of activity during the pandemic so far proving unfounded.
“The steady recovery has been helped by confidence in the wider property market, where house price gains over the last year have given many homeowners more equity at their disposal.
“Equity release has become a socially important means for one generation to help another, as well as meeting later life financial needs. June’s stamp duty deadline will have prompted some older homeowners to pass on a ‘living inheritance’ so that younger family members can climb the property ladder.”
Mark Gregory, founder and CEO at Equity Release Supermarket, added: “It is encouraging to see the broader equity release market grow in Q2, but ongoing COVID restrictions have continued to hamper customers putting their long-term financial goals into action.
“Undoubtably, the Stamp Duty holiday ending in June and the associated buoyancy in the housing market have had a significant influence on the equity release sector in Q2. At Equity Release Supermarket, we certainly saw this, as our customers use of some of their money for ‘house purchase’ increased by 196% year on year and ‘gifts to children’ increased by 38%.
“It is unlikely that the huge increase in property purchase will continue now that the Stamp Duty holiday has ended, but parents supporting their children financially through a ‘living legacy’ is now a staple use of equity release. Our recent research showed that 75% of those polled are still supporting their grown up children and 52% wished they could give their children more money.
“Recent product innovation in the market is making it simpler for parents to both support their children now, while still providing an inheritance. The combination of low interest rates, (which are fixed for life) and fixed term Early Repayment Charges has made equity release an increasingly flexible, financial option in later life.”
