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Whopping 123% rise in house purchases – has the market bounced back?

An equity release advisory is reflecting on the shifts in equity release usage and behaviour in the first quarter of 2021.

Research from Equity Release Supermarket (ERS) has revealed a staggering 123% boost in house purchases and a rise in the purchases of second homes – up 17% compared to Q1 2020.

Its findings also suggest 59% more customers are gifting some of their funds to their children compared to the same period last year


ERS says the results could be due to the continued support parents provide for their children, particularly those affected by the pandemic.

Many young people are striving to get on the property ladder, especially given the benefits of the stamp duty holiday, which is available until the end of June this year, hence parents are using their equity release funds to help support their children become homeowners.

Mark Gregory, founder and chief executive officer at Equity Release Supermarket, comments: “Findings on the usage of funds is probably as you would expect given the advantages of the stamp duty holiday, helping those looking to get on, or move up the property ladder.” 

“Whilst the government-backed mortgage scheme, which launched mid-April, offering first-time buyers 95% LTV mortgages is welcomed, even a modest £10,000 deposit on a £200,000 property is a significant amount of money for those who have been unable to start saving.”

Gregory says this doesn’t help or support those who already own a property and are looking to upscale or move up the ladder.

The data also noted a vast rise in sales across the London area. Their average value of the amount borrowed in the capital increased by 39% year-on-year, whilst the average case increased by 33%.

In addition, sales across the southern region of the UK witnessed a notable rise in comparison to last year. London, the South East and the South West all accounted for 52% of sales in Q1 of this year, as well as 64% by value – an increase of 11% compared to the same period in 2020.

Gregory continues: We’re seeing a resurgence in consumer confidence return to the ‘core’ regions of the UK, with the stamp duty holiday and easing of lockdown restrictions playing a key part in this heightened recovery.”

“High-net-worth property owners taking advantage of low-interest rates and the flexibility that many lifetime mortgages now offer, such as fixed-term early repayments charges, have also driven the higher case values reported across London.”

In comparison to Q1 last year, utilising money borrowed to repay debts fell by 41%. Other reported usage decreases were new car purchases (-57%) and holidays (-70%).

Gregory adds: “Whilst we’ve ensured that all our digital functionality was in place at the start of the pandemic, if not before, to support our customers, what’s somewhat surprising is the continued adaption consumers have taken to remote advice.”

“Some 8% now prefer to use a combination of telephone and video to communicate, which was the equivalent number of consumers engaging in face-to-face advice in the same period. In stark contrast, 37% of sales were from face-to-face advice alone in Q1 of last year.”

Equity Release Supermarket has also witnessed growth, with the level of enquiries and interest rising by 21% year-on-year and the value of applications increasing by 15%.

“Despite being in lockdown throughout Q1 of this year, unlike last year, we have still grown and reacted quickly to our changing customer needs,” Gregory concludes.


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