Photograph of Andrea Rozario, the author of this document.

The Covid Financial Pinch

Beyond the obvious and tragic consequences of the global pandemic, another pervasive impact has hurt millions throughout this crisis. According to a recent survey from the FCA, Covid-19 has resulted in a huge financial pinch for a majority of Brits. The Financial Lives Survey, which took a deep dive into the financial security of the nation, revealed that some 52% of UK residents could be considered financially vulnerable – which equates to over 27 million people. What’s more, in the month of October 2020 alone, around a third (nearly 16 million people) said they expected their household income to fall, and more worryingly still some 13.2 million people worried they would not be able to make ends meet.

Hopefully we are reaching the final furlong of this pandemic, but the financial impact of Covid-19 will have a particularly long tail. However, despite the struggles, there are some investments and areas that have remained stable – even growing – throughout the pandemic. 

The most vital of these is property. Something millions of people across the land have wisely invested in, and one of the few areas of the economy that has remained secure despite the pandemic. In fact, house prices, on average at least, have even grown in value during Covid, despite a large number of analysts and commentators expecting it to go the other way. 

Looking back to October 2020 in a different light, average values soared at a faster rate than in any time in the past four years. House price analysis from The Halifax also showed that the month saw the national average hit £250,000 for the first time in history. Now, much of this increase may be down to the stamp duty holiday and The Halifax do indicate that growth may be slowing down, but 2020 still saw a 6% increase in average house prices whilst almost all other parts of the economy and society were more than struggling.

What this shows is that housing is becoming ever more important in the landscape of personal finance. While pensions, savings, and now even employment have been hammered by the pandemic, property remains a healthy and secure investment. The key challenge, therefore, is helping those people who need, or want to use their home to support their needs. 

Products like equity release or options like downsizing will both become more popular in years to come. All the evidence is pointing in this direction as other financial avenues shrink while house prices climb, so we need to continue our fight for mainstream recognition and continue to launch intelligent products within the later life lending sector. Of course, equity release won’t be perfect for everyone, but when other viable financial options have dwindled at such a rate, having another route to explore is essential..

The bricks and mortar of homeowner’s properties across the UK will become – and in fact already are – integral to later life planning for millions. Whilst having so many awful and immediate effects, the pandemic has highlighted what appears to be, the solidity of property wealth.

For the future of retirement planning and the finances of homeowners throughout the country, supporting free choice and spreading knowledge of how they can use this critical equity helps to empower people to make informed decisions and help them to understand the potential role equity release may play in their financial security