Revealed – Covid’s ongoing effect on the housing market

Equity Release Supermarket (ERS) has reported the behavioural shifts and factors still influencing customers due to the ongoing effects of the pandemic.

Recent data has revealed a shift in the usage of funds, driven by both the government’s support measures and changes in consumer behaviour.

Unsurprisingly, the stamp duty holiday that runs until 31 March 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 2020, 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 the year before.

Periods of lockdown has also influenced spending habits, as customers using equity release to cover debt repayments fell to 7% in the last quarter of 2020. Debt repayment attributed to 9% of usage in the same period in 2019.

Mark Gregory, founder and chief executive officer at Equity Release Supermarket, says the results aren’t particularly surprising, given the stamp duty holiday and many people potentially having more disposable income to reduce their level of debt.

He comments: “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.”

ERC case values also noted a sharp upsurge within the same period. Figures increased dramatically by 42% compared to Q4 in 2019. Year-on-year case values rose 24% throughout London in 2020 compared to 2019.

As you’d expect, the last quarter of 2020 recorded a significantly lower percentage in the use of funds for holidays compared to Q4 2019. Remarkably, usage for holidays over the entire year only fell 2% from 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. ‘Gifting to children’ has remained static, equating to 16% in Q4 2020, the same as the previous period in 2019.

Interestingly, Equity Release Supermarket’s video communications channel, which launched at the start of the pandemic in March last year, grew in popularity.

Gregory says: “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.”

In light of this, the equity release advisory service plans to launch a new digital platform to give its 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,” he adds.

“I am delighted by our business performance in 2020, with business submitted to lenders up 17% YOY and revenues up by 16%.”