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The Equity Release Market Monitor, published today by Key Retirement Solutions, the UK’s number 1 independent equity release specialist, reveals the latest figures on the performance of the equity release sector.
The results for quarter 2 of this year show a drop in the number of new plans, down 24% (Quarter 2 2009 – 5,143, Quarter 2 2008 – 6,747). The overall value of new lending though experienced a more dramatic result falling 41% (Quarter 2 2009 – £189m, Quarter 2 2008, £319m). The wide ratio between plan numbers and values stems from the drop in average loan size. The average loan has fallen in value by 23% from £52,820, Quarter 2 2008, to £40,766 for the same period this year, this reflecting loan to value against reduced property prices and the level of lower initial releases from drawdown plans.
Equity release continues to be used for a range of purposes with Home Improvement still being the most popular. Helping the children out financially is now, for the first time, the second most popular reason. The Monitor also shows the diverse borrowing trends by region where the difference in average loan amount from the highest to the lowest region is almost £50,000, and the difference of average customer property value is as high as £332,000.
As predicted the average age of those releasing equity continues to gradually fall. The average age for the period was 67 compared to 68 for the same period of 2008. This continues to follow the trend of the past couple of years as more are turning to equity release at younger ages. The Monitor shows that the core age range for people to release equity is 65 to 74.
The Monitor reveals the results for the half year compared to the same period for 2008 and shows that the number of new loans year to date is 9,852, compared to 11,805 for the same period of 2008, a fall of 17%. The total value of new lending is down by 33% to £372m.
Whilst the equity release market shows a fall against 2008 the results show a positive for the quarter on quarter result for this year with the number of new plans increasing by 9% and new lending by over 3%.
Dean Mirfin, Key Retirement Solutions Group Director, said: “Whilst the number of new equity release plans arranged is down for quarter 2 year on year, the value of lending has been harder hit as a natural result of lower property values. The average property value for the period this year was £205,675 compared to £224,487 a year ago. The positive is the fact that in part the decline in lending values reflects the increasing uptake of drawdown plans where customers can release a lower amount initially and then return for further funds when needed, this can heavily reduce the cost of borrowing for customers.”
“The results for quarter 2 over quarter 1 are encouraging and we believe that the demand for equity release will continue, and following this turbulent period will return to, and then exceed, previous business levels.”
For anyone looking to release equity from their home to help ease the financial burden in retirement, key’s independent guide to equity release is the best place to start. This can be obtained by calling 0800 531 6010 or visiting our website https://www.keyrs.co.uk/equity-release-guide where the guide can be downloaded.
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