Equity release demand slides amid pandemic turbulence
◆ The number of new equity release plans entered in the first half of the year tumbled to 18,420, a 15pc fall against the same period last year, as the Covid pandemic disrupted the property market and financial planning, writes Michael O’Dwyer.
Among customers who already had equity release contracts in place, fewer sought fresh cash advances, and withdrawals were smaller than in the previous six months, according to figures from the Equity
Release Council. David Burrowes, its chairman, said that there were “initial signs of a recovery in June”.
Equity release allows customers to unlock part of the value of their home and receive cash, either in a lump sum or in several smaller amounts, on which they pay interest. The sector has attracted criticism as compounding interest can increase customers’ debts and wipe out inheritances.
The average interest rate on an equity release loan hit a record low of 4.1pc in July.