Leading independent equity release advisory service, Equity Release Supermarket (ERS), has reported a strong resurge of consumer appetite and business growth following a successful Q3, as people get back to some form of normality following months of uncertainty.
Data released from the UK based company showcased a renewed interest in equity release as enquiries increased a whopping 31% in comparison to Q2, marking a strong build to the end to the year. Whilst face-to-face meetings between advisers and clients have steadily increased in Q3, interestingly Equity Release Supermarket’s video communications channel, launched this year, has continued to grow in popularity with a 3.7% boost compared to the previous quarter.
Mark Gregory, Founder and CEO of Equity Release Supermarket commented: “We’ve clearly seen a fundamental change in consumer behaviour and trends, digital activity and the way we do business during the pandemic, which we have responded to with the launch and evolution of our own digital channels. However, we’re now witnessing a rebound in business particularly as lenders and solicitors are returning to a more ‘normal’ working environment. Plus, consumers are equally eager to resume to some kind of normality.”
According to ERS, other notable indications of a promising end to the year include increased lending, which rose by 45%, as well as an uplift of 42% to new plans issued and average case values rising by 4% in Q3 compared to Q2.
Findings from Equity Release Supermarket also highlighted an increase in case sizes regionally, indicating that consumer confidence is returning to the market throughout the majority of the UK. In London cases were up 10%, as well as the Southeast which also reported an uplift of 10%. Yorkshire and Humberside were up 16%, whilst Scotland recorded an impressive 18% increase. However, there was a drop in case sizes in the Northwest, bucking the regional trend with a decrease of 8%.
In comparison to Q3 2019, Q3 of 2020 logged some interesting changes to the way people are using their equity release funds. As expected given the downturn in the aviation industry and restrictions on travel, staycations are on the rise. Usage of monies for a mobile home or caravan were up 400% in comparison to the same period last year, whilst ‘holidays’ decreased fairly dramatically from 3% in Q3 of 2019, to just 2% in the same period of this year – a 33% fall.
Perhaps somewhat surprisingly was a recorded growth in property purchases. The reduction in stamp duty likely played an integral part of this growth, coupled with the lowest interest rates the market has seen on lifetime mortgages. Hence, ‘house purchases’ doubled YOY, surging to 8% in Q3 of this year, up 100% on last year, and ‘buying a second home’ increased 300%, rising from 1% in Q3 of 2019 to 3% in Q3 of this year.
The report from Equity Release Supermarket also highlighted age-related shifts reflecting the challenges of Covid-19. Findings identified that those aged between 60 and 64 dropped from 29% in Q2 to 25% in Q3, indicating that this pre-retirement age group were less likely to utilise equity release monies on supporting themselves and their families at this time, as they adjust financially to Covid-19.
Traditionally, the most popular age group for equity release is between 70 and 74, which also dropped from 23% in Q2 to 20% in Q3. Again, potentially due to the fact that their spending habits have changed during the pandemic making them less inclined to spend due to lockdown measures and subsequently delaying their decision to take out equity release.
Mark added: “Whilst we are seeing slower growth compared to this quarter last year, this is not due to a fall in market interest, in fact that’s back on the rise, but simply due to a delay in processes and a period of uncertainty for the country as a whole due to challenges caused by the pandemic.
“We’ve witnessed a shift in behaviour, usage trends and age-related changes over this period. In Q3, 59% of plans were taken in a lump sum, whereas this percentage was 63% in Q2. Drawdowns also decreased from 37% in Q2 to 35% in Q3, again indicating that fewer customers required the maximum release available to them to support themselves and their families, given that less spending opportunities are available.
“The pandemic has no doubt had a detrimental effect on numerous businesses and presented many challenges. However, despite these challenges, at Equity Release Supermarket we have continued to stay true to our ethos and roots, taking a pioneering approach and adapting nimbly to all activity and the industry as a whole.
“This dynamic approach has seen our enquiry levels surge, and enabled us to buck the market trend, setting us in a strong business position for the remainder of the year and beyond.”