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£290 million released from UK homes so far in 2008. Read Key’s market report for quarter 1, 2008.

14th April 2008

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(203k)

Total amount released over £290 million
Total number of plans down over 16%
Average amount released up over 10%
North of England sees strongest resilience with the North and Yorkshire and Humberside retaining or increasing levels of new plans

Key Retirement Solutions’ equity release market monitor for the first quarter of 2008 shows a drop in the equity release market compared to the first quarter of 2007. The total number of plans taken out during the first quarter of 2008 was 6,009 (2007 quarter 1 – 7,196) representing a decrease of 16.5%, the total amount released though did not see as high a decline following an increase in average amount released per plan. The average amount released increased by 10.9% to £53,084 (2007 quarter 1 - £47,864). The overall total release for quarter 1 2008 was £293m (2007 quarter 1 - £321m) a decrease of 8.8%.

The South East (excluding Greater London) continues to lead the way with the greatest number of plans sold at 1,200 and the highest total lending at £77m. The North West maintains second place in the league table of plans sold with 813. The North of England has seen a consistency of plan numbers year on year with 263 plans for the same periods of 2007 and 2008. Yorkshire and Humberside was the only region to see an increase in plan numbers with a 1.16% increase. The total number of plans taken out during the first quarter of 2008 was 613 (2007 quarter 1 – 606)

Consistently London outweighs all other regions with regards to the average amounts released seeing a 24.6% increase with an average for quarter 1 of 2008 of £89,530 (2007 quarter 1 –£71,837). The trend continues in the popularity of drawdown plans having seen a consistent increase in market share throughout last year. Drawdown plans accounted for 62% of all plans for the first quarter of 2008 (2007 quarter 1 – 40.%). This reflects the position of drawdown which for quarter 4 of last year was again 62%.

Home reversion plans remain at the same level as they did a year ago accounting for a 5% share of the market. Regulation one year on has yet to result in any year on year increase overall in this sector or the market. Interestingly the average age of people releasing equity from their homes continues to fall. The average for quarter 1 2008 was 68 (quarter 1 2007 – 69). Northern Ireland has the youngest average age of 65 (quarter 1 2007 – 67).

As we included in the report last quarter, we again show the most popular uses of equity release. The main uses are home and/or garden improvements 61%, holidays 35% and repaying debts at 33%. 21% of those taking out plans are using some of the money to help out family or friends at a time when they see this as being more beneficial.

Dean Mirfin, Business Development Director at Key Retirement Solutions, comments:

“It has been a difficult start to the year for many people as the fall out of the credit crunch has hit home and we are faced with volatile and uncertain economic and market conditions. Gross lending on traditional home loans is down 6% year on year in February alone¹, and it is unsurprising that we have also seen a slight downturn in the number of equity release plans taken out across the whole of the first quarter this year, compared to last year. However, the equity release market remains strong, with more than £290 million released from UK homes over the last quarter.”

“If there is to be a period of unsettled property prices, those considering equity release may well be wise to lock into a deal sooner rather than later. Interest rates are still very competitive with rates as low as 5.99% fixed for life, and arranging the facility now may help reduce disappointment should there be any reduction in property prices.”

“Unlike the mainstream mortgage market we have not seen an upheaval in either rates or the ability of providers to lend. This is testament to the fact lenders are fully committed to the equity release market. We have seen positive increases in the number of enquiries as the quarter has progressed which once filtered through to the second quarter should reflect positively in the results at the half way stage of the year.”

Notes to editors
¹ Gross lending declined to an estimated £24 billion in February, down 7% from £25.9 billion in January and 6% from £25.6 billion February 2007, according to the Council of Mortgage Lenders. (20th March 2008)

No. Equity Release plans Q1 2008 on Q1 2007

Area	Value	Percentage Change (Q! 2008 on Q1 2007)	Number	Percentage Change (Q1 2008 on Q1 2007	Average Value Released	Average LTV	Average Customer Age
East Anglia	£11.5m	-35%	269	-42%	£48,218	22%	68
East Midlands	£17m	-11%	513	-5%	£37,393	20%	67
London	£42.8m	12%	538	-10%	£89,530	24%	70
North	£7.4m	14%	263	0%	£31,551	22%	68
North West	£28.1m	-3%	813	-19%	£38,851	21%	69
Northern Ireland	£4.5m	-18%	75	-37%	£67,041	23%	65
Scotland	£16m	38%	344	-2%	£52,244	28%	69
South East	£77.8m	-5%	1200	-18%	£72,903	24%	69
South West	£34.5m	-37%	606	-34%	£64,106	26%	69
Wales	£12.9m	-7%	281	-10%	£51,469	25%	68
West Midlands	£18.8m	-21%	494	-13%	£42,841	20%	68
Yorks & H'side	£22.2m	22%	613	1%	£40,859	22%	68