According to the Equity Release Council’s (ERC) market statistics for Q2, this was down from the 11,790 plans completed in the first three months of 2020.
The total of new and returning customers served in Q2 also dropped 38 per cent to 13,617 compared to the previous quarter and on the same period last year, this was a 35 per cent decline.
The value of property wealth released during the second quarter also fell to £698m compared to £1.064bn in the previous quarter.
May was the quietest of the three months for new plans agreed, with 2,229 completions compared to the average 3,693 plans per month in the previous quarter.
There were 2,533 plans completed in April, which the ERC said was likely to be those which were arranged before the country went into lockdown.
New plans picked up in June with 2,579 completions, however this was down 30 per cent on the monthly average seen in Q1.
Drawdown lifetime mortgages were the most popular new plan agreed, accounting for a 55 per cent share. This was down from the 57 per cent share this plan had in Q1.
There were 4,011 new drawdown plans taken out, down 36 per cent on the previous quarter, and the average first instalment remained flat at £68,606 compared to Q1’s £68,492.
Lump sum lifetime mortgages made up 45 per cent of completions in the quarter. Compared to Q1, this was up from a 43 per cent share.
However, the number of completions were 31 per cent down on Q1 with 3,328 new plans agreed. The average loan size also fell to £99,959 – the first time since Q3 2019 the average loan size has dipped below £100,000.
David Burrowes, chairman of the ERC, said: “Equity release market activity continued to mirror wider economic conditions, with the confidence of early 2020 giving way to caution as households assess the impact of coronavirus on everyday life.
“Careful precautions have kept the market open to those who wish to choose the option of equity release and ensured customers have access to property wealth to help meet important financial and social needs.”
“That said, the fall in the number of new plans and fewer returning customers accessing extra funds are clear signs of people pausing to see how the wider situation unfolds,” he added.
Claire Singleton, CEO of Legal & General Home Finance, said: “What these figures show is that people have been cautious about committing to long-term financial decisions during the pandemic, and whilst so many activities that often prompt interest in equity release were on hold.
“A dip in demand is to be expected in these circumstances. The decision to pause and take time to consider their options will have been the right one for many homeowners, and people should always think carefully before taking out a lifetime mortgage.
“As the economic picture becomes clearer I think demand will return.”
Will Hale, CEO at Key, added: “The market has experienced a significant slowdown not only because cases are taking longer to complete but also because homeowners, whilst wanting to explore all their options, are rightly cautious and are often choosing to delay accessing their property wealth because of the ongoing uncertainty.”