Equity release withdrawals at £300m

Last Modified: 24 Jul 2007
Source: PA News

Retired homeowners withdrew a record £300 million from their properties during the second quarter of the year, figures have showed.

Trade body Safe Home Income Plans (Ship), which represents 90% of the equity release sector, said more than 7,400 new plans were taken out during the three months to the end of June, 16% more than during the same period a year earlier.

The total value of the new business was £302.3 million, the highest figure to date, and up from £262.8 million during the same period in 2006. Ship said the figures contributed to a record half-year for both the number of new equity release plans taken out and the value of new business.

During the first six months of 2007 14,224 new plans were sold, 11% more than during the same period a year earlier, worth a total of £596.2 million. That figure represents a 10% increase on the first half of 2006.

Equity release enables retired homeowners to withdraw equity from their home without having to move. People can either sell a portion of their home to a home reversion company for a lump sum, or they can take out a lifetime mortgage against the value of their home, with the mortgage not repaid until they die or move house.

Ship said the popularity of drawdown mortgages, which enable people to unlock cash in stages, continued to grow during the quarter. These plans now account for 47% of all new business, compared with just 21% during the same period of last year.

Jon King, chief executive of Ship, said: "This quarter's figures demonstrate tremendous growth in business for Ship members and the equity release market as a whole.

"The number of new plans sold represent not only a record second quarter but also contribute towards a record half-year since figures were recorded."

Research by equity release intermediary Key Retirement Solutions also showed the equity release market was enjoying strong growth. The group said demand for equity release plans had increased by 18% during the first six months of the year, while the amount of money unlocked jumped by a third to £660 million.

It also saw a strong rise in demand from consumers for drawdown mortgages, with the number of these loans taken out rising by 225% to account for 44% of all new plans. But at the same time the number of people taking out home reversion plans, under which they sell a proportion of their home, fell to account for just 6% of new business.

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