Equity release demand is on the rise

Justin Wysocki is chief revenue officer at Age Partnership

COVID-19 has impacted most industries around the country, and the equity release sector is no different.

After an unsettled 2019 due to the national uncertainty around Brexit, the start of 2020 brought with it a period of stability. Clients felt more in control of their own finances, and the volume of discussions that we were having with clients about planning for the future reflected this bounce back.

Age Partnership: Clients continue to look forward to home improvements and holidays

Heading into lockdown

Even as we headed into March and lockdown was announced, demand for equity release remained strong, and the number of quotations that we carried out that month was actually up 13% when compared with January and February 2020.

The increase in quotations can be largely attributed to people who had previously considered equity release in the past. These clients were already aware of the option of equity release and found a second enquiry less daunting than someone who was approaching it for the first time.

March was followed by a sharp decline in completions during in April and May, as the first full months of lockdown took hold and the number of valuations taking place was pretty much zero.

However, as recently announced in our Q2 data, contrary to the huge decline in completions, during the last quarter we actually only saw a 12% decline in the volume of quotations that we provided. And in June, the number of equity release quotations that we carried out for our clients was actually up 10% when compared to February of this year.

Family support

During the last quarter there was also a change in who was coming to us for equity release. In Q2, couples accounted for 61% of all completions, a growth of over 6% on Q1, whilst there was a decline from both single males and females. This may highlight cautiousness and the need for support when making huge financial decisions, such as whether to release equity.

We always encourage our clients to discuss their plans with their family and if possible to include them in the equity release conversations right from the initial stages. This family-centred approach is something that has continued throughout lockdown with the use of video calling, enabling discussions to take place wherever that family is located.

Including family in the discussion is all part of delivering our gold standard level of advice and delivering the best possible outcomes for our clients.

Careful consideration

The average amount that clients released from their homes reduced during the last three months from £61,657.83 in Q1 to £60,142.67 in Q2. This suggests that clients are being more considered about what they need the money for and how much they actually require.

I predict that the current return to demand for equity release will continue; the increasing flexibility of plans, including the option of making ad hoc repayments, means that equity release is now suitable for a growing number of personal situations.

Look at how far equity release plans have come. Historically they had little flexibility and the only option for repayments were interest-only plans with a fixed amount payable each month. Now most plans offer the option of repayments and they can be as frequent or infrequent as the client wants them to be. Just look at the newly launched Pure Heritage plan, payments can be as little as £50, or up to 40% of the loan. And they are making it as simple as possible to facilitate payments.

As demand increases we have a responsibility to our clients to ensure that we deliver the best possible advice that we can. And as stated in the recent FCA review, we should be evidencing this advice – which is why we continue to record all interactions with our clients regardless of where they take place.

Equity release is never going to be right for everyone, which is why we look at each client on an individual basis and as part of a multi-product solution; but I think that a growing number of people will consider equity release as a part of their plan for financing their later life.