Equity release sales slumped in the wake of the coronavirus, but have since rebounded, data acquired by Mortgage Strategy sister title Money Marketing has found.
A Freedom of Information Act request to the FCA reveals that sales of lifetime mortgages and home reversion plans nearly halved between January and May.
However, September’s figures have almost bumped sales back to where they were at the start of the year.
Since the pension freedoms in 2015, equity release sales have been beating a path skywards.
Average monthly sales of lifetime mortgages and home reversion plans were 1,982 in 2015. The following year, this rose 19% to 2,360. By 2017, sales had reached 3,038, before increasing by another 18% to 3,588 in 2018.
While the rate of growth slowed slightly going into 2019, at the end of the year the market was still nearly twice the size of what it was in 2015.
In January 2020, sales came in at 4,159, compared to 1,812 in January 2015. However, by May this year, sales had fallen back to 2,228.
For September 2020, the latest month for which figures are available, sales had bounced back over 4,000.
The data also reveals that the vast majority of advice firms authorised to sell home reversion plans don’t actually advise on them in any given quarter.
Since the second quarter of 2015, the proportion of firms authorised to offer home reversion plans that reported no sales on a quarterly basis has been as low as 74 per cent.
As many as 96 per cent of advisers with the permissions have not sold a home reversion plan in a given quarter.
While many investment advisers may have equity release qualifications just in case a particular client requires planning in the area, an increasing number of mortgage clubs are looking to branch out into the wealth space.
Just Mortgages, for example, is looking for 15 potential wealth advisers to join its brand-new wealth division, Just Wealth.
In June, the FCA raised a number of concerns with how equity release advice is being given, however, including that firms weren’t always able to evidence that their advice was suitable.
Rates have also fallen recently. The average interest rate for an equity release product fell from 4.48 per cent at the start of 2020 to 4.11 per cent in July, according to Equity Release Council data.
