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In Industry Difficult Circumstances Equity Release Holds It
13/05/2010
In Industry difficult circumstances Equity Release Holds it’s Own
During the 1st quarter of 2010 the number of customers entering into The Equity Release market, declined slightly by 3%. SHIP (Safe Home Income Plans) the trade body of Equity Release, said that this could be expected due to the number of providers that had either suspended, limited their product range or had withdrawn from the market. These factors could have contributed to the fall in activity, seeing a reduction by 8% compared to the 1st quarter in 2009. The market saw sales of £213.4 million and as with the mortgage market it is suspected by SHIP that the equity release market was also affected by the bad weather.
Drawdown equity release – this is where homeowners borrow against their property, only releasing the value gradually which helps to boost their income. This is the most popular way for people to unlock cash from their homes without having to move. Drawdown represents more than half of the market with £116.4million of sales.
Meanwhile, home reversion equity release schemes – homeowners sell a portion of their property. The proceeds of which can either be taken in a lump sum or as income. Home reversion saw a 10 per cent rise in popularity, accounting for £4.4million of equity release revenue
Commenting on the figures, Andrea Rozario, director general of SHIP, said they illustrate that "despite the withdrawal of some big providers from the market the equity release market remains robust. The bad weather at the beginning of the year has also obviously had some impact on the first quarter results with conditions making business difficult but reports from members now show a very strong run rate."
Ms Rozario also expects more providers to enter the market this year and replace those which have left. "SHIP is confident that over the course of the year the market will remain strong," she added.
Dominic Fraser-Smith, from equity release provider Aviva, agreed with Ms Rozario's belief that the fall in the equity release market is a reflection of providers leaving the market due to the current economic climate, "as opposed to a fall in demand for equity release products."
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