Leading independent equity release advisory service, Equity Release Supermarket (ERS), has reported the behavioural shifts and factors still influencing customers due to the ongoing effects of the pandemic, as well as how the measures brought in by the Government to support the economy have affected consumer activity.
Data released by the equity release market’s digital pioneers revealed a shift in the usage of funds, driven by both the Government’s support measures and changes in consumer behaviour. The Stamp Duty holiday that runs until the end of March this year, has encouraged ERS customers to take advantage of the opportunity before the deadline. Consequently, those using funds to support a house purchase more than doubled to 9% in Q4 this year, accounting for 4% of sales in Q4 2019. Across 2020, 50% more customers used some of their money to fund a house purchase than in 2019.
Periods of lockdown has also influenced spending habits, as customers using equity release to cover debt repayments fell to 7% in Q4 of 2020. Figures show that debt repayment attributed to 9% of usage in Q4 2019. In 2020, debt repayment was used by 8% of customers, falling from 11% in 2019.
Mark Gregory, Founder and CEO at Equity Release Supermarket commented: “Findings on the usage of funds are not necessarily surprising given that 2020 gave rise to the Stamp Duty holiday and during lockdown periods many people found they were spending less; potentially having more disposable income to reduce their level of debt.
“During Q4 of last year, we interestingly witnessed a resurgence in the London market. This again could be due to the Stamp Duty holiday, or perhaps the resilience in the housing market and the all-time low interest rates currently available across equity release plans.
“At Equity Release Supermarket, we reported that the London region accounted for 10% of sales in Q4, up from 8% in Q4 2019, and at year end London’s share of business was up 0.2% at 7.9% vs 7.7% in 2019.”
Following the rise in sales across the London area, Equity Release Supermarket’s case values also noted a sharp upsurge within the same period. Figures increased dramatically by 42% compared to Q4 in 2019. YOY case values also rose 24% throughout London in 2020 compared to 2019.
In comparison to Q4 2019, Q4 of 2020 unsurprisingly recorded a significantly lower percentage in the use of funds for holidays. Not only did the aviation industry experience a massive downturn, but the tighter restrictions on travel led to this usually popular means of funding report a 0% figure in Q4 of 2020. Remarkably, usage for holidays over the entire year did only fall by 2% in comparison to 2019, however there was a rise in staycations throughout 2020, with more equity release funds spent on mobile homes or caravans.
Given the ongoing economic uncertainty, figures suggest that people are keen to use their funds for personal reasons. Hence ‘gifting to children’ has remained static, equating to 16% in Q4 2020, the same as the previous period in 2019. Year on year, the percentage figure was the same.
Remote meetings with customers, either over the telephone or via video, became the ‘new normal’ in 2020. In Q4, 50% of plans issued originated from the ‘phone, up from 39% in Q4 19. In 2020, this figure stood at 51%, up from 40% in 2019. Equity Release Supermarket’s video communications channel also grew in popularity across the year.
Mark went on to say: “Our customers have really embraced our video channel, launched at the start of the pandemic in March last year. This has allowed customers to feel comfortable, safe and as close to a face-to-face personal experience as possible. This has been reflected in our results, with 100% more sales coming from the video channel in Q4 than in Q3.
“Pioneering digital technology to support customers through the process is at the heart of Equity Release Supermarket and in the next few weeks, we will be launching a new digital platform which is a first for the industry and will give our customers greater control and insight as they research their later life lending options.
“Despite the challenges faced over the past 10-months, with the inevitable longer-term effects yet to be seen, at Equity Release Supermarket we have taken an agile approach, kept a positive outlook and adapted nimbly to the ever-changing market landscape. I am delighted by our business performance in 2020, with business submitted to lenders up 17% YOY and revenues up by 16%.
“This is testament to the quality of our advice, our dynamic and talented team of advisers and our forward-thinking approach. As ever, our customers remain our number one priority. With enquiry levels continuing to grow, we remain in a strong business position and look forward to both supporting and driving the market throughout the course of 2021.”