The number of new equity release plans agreed in the third quarter increased by 41 per cent compared to the previous three months to reach 10,351, figures from the industry trade body reveal.

The Equity Release Council found that, while there was a substantial pick-up in activity after lockdown restrictions eased, the number of plans agreed was still 9 per cent lower than the same period in 2019 when there were 11,419.

The total number of new and returning customers served in Q3 2020 was 18,154, up 33 per cent from the 13,617 in Q2 2020 but down 18 per cent from 22,131 during Q3 2019. 

Borrowers released £963m of property wealth in Q3 – up 38 per cent from the previous quarter and down 3 per cent year on year.

Of the 4,545 new lump sum lifetime mortgages taken out in Q3, the average loan size remained stable quarter on quarter at £99,69, but was 4 per cent higher than a year ago. 

Of the 5,806 new drawdown plans taken out in Q3, the average loan size of £70,244 was up by 2 per cent on the previous quarter and , and increased by 11 per cent year-on-year. 

Canada Life head of marketing for insurance Alice Watson says the figures should be reassuring and encouraging for the industry as they bring the market close to the levels of activity that prevailed before the pandemic.

She says: “The effects of coronavirus are stretching personal finances across the country and I expect that this growth in equity release activity will continue as more people consider accessing their property wealth to finance home improvements or support the day-to-day costs of living.”

Key chief executive Will Hale says: “The figures underline our belief that the early signs of a bounce back in the market in June were sustained throughout the summer with September seeing the busiest month for new customers.

“Summer saw the easing of coronavirus restrictions across most of the country and that coupled with pent-up demand helped contribute to the much stronger performance compared with the second quarter of the year.  “Continued low rates, further product innovation and advisers adapting to remote-working models will help support customer demand through the rest of the year and into 2021 even though coronavirus uncertainty and restrictions look likely to remain with us for some time.”

Equity Release Supermarket founder and chief executive Mark Gregory says: “In line with the industry, we similarly faced a considerable fall in enquiry volumes when the country embraced a full lockdown in April. “However, this was relatively short-lived for us and since May we’ve witnessed double digit growth in our enquiry levels, which we’ve been able to sustain right through until the end of September, with October likely to continue in the same vein. 

“A triple ripple effect of challenges hit the whole industry in Q2, not only were enquiry levels down at the start of the quarter, but lenders and solicitors had to adapt quickly to create solutions to remote working, along with the application process, all without being able to conduct face-to-face valuations or in-person legal advice. 

“The sector subsequently felt the shock of these challenges, which then had a significant impact on new and returning business across Q2.” 

Gregory adds: “We are seeing a significant increase in the number of customers using their equity release money to purchase property, which has no doubt been stimulated by the reduction in stamp duty.”

Equity Release Council chairman David Burrowes says: “These figures show a steady return to something closer to normal activity over the summer, after the market weathered the initial impact of Covid-19. 

“With the country experiencing a break from lockdown, the pick-up was helped by a mix of new enquiries and delayed cases from earlier in the year.”

He adds: “Looking ahead, the key market drivers remain in place: people are living longer and retirement finances are increasingly squeezed as generous final salary pensions edge further to extinction. 

“Many older households are already facing a situation where their expenses outweigh their disposable income, which makes access to property wealth an important pillar to support later life living standards.”