Newly released figures from equity release adviser, Key, have shown that, during Q1 this year, over-55s took out more modest sums than previously - with the average amount released falling by 3.8%.
However, the market is showing signs of resilience as plan sales rose 6% year-on-year from 11,190 to 11,881.
According to Key, these changes were in part fuelled by the increase in the sales of drawdown plans which provide additional flexibility by allowing homeowners to ring-fence part of their release for future use. The total of reserved drawdown rose from £349.1m in Q1 2019 to just over £390 million leaving the market value almost unchanged at £1.2bn.
Will Hale, CEO at Key, said: “Following a year of political and economic uncertainty the equity release market started well in 2020 and has proved remarkably resilient given the unprecedented circumstances the UK and the world finds itself in. Consumers are more cautious and while we are finding an increased number of people using equity release, they are taking out less and using more drawdown products to help future proof their later life finances whilst mitigating the impact of roll-up interest.
“Our new analysis of the driving force behind equity release decisions suggest that this is a multi-use product-driven often by need rather than aspiration with substantially more of the proceeds being spent on debt repayment and helping family members than holidays. While in an ideal world, everyone would enter retirement debt-free, equity release provides those who are not that lucky with real options – supported by a robust specialist advice process that is designed to help people make the right choices for their individual circumstances.”