“Middle England” cities across the UK are leading the equity release boom
The Equity Release sector saw continued strong growth in the first quarter of 2005, with the value of plans taken out exceeding £370m for the third successive quarter, according to IFA Key Retirement Solutions. The value of Equity Release business completed in the three months to 31st March 2005 was £376m, the second highest on record, and an amount 38.75% greater than in Q1 2004 (£271m). There are now 97,200 equity release plans outstanding valued at £4.27bn.
Key Retirement Solutions’ analysis shows that this growth is being led by cities and towns across the UK that epitomise “Middle England” – with the greatest number of plans being taken out in Brighton, Sheffield, Birmingham, Leicester and Chester postcode areas.
Key Retirement Solutions say that the record quarter figures reflect the fact that equity release is now a mainstream financial option among “equity rich” over 65s seeking to supplement their retirement income and take advantage of the growth in the value of their property. The strength of demand in a diverse range of cities and towns across the UK show that equity release is firmly established throughout “Middle England”.
Q1 2005 Trends
Across the country, the average age of the equity release customer rose slightly to 71 years, (Q4 2004 = 70), and the average amount released was £45,685 (Q4 2004 = £47,683) on a property with an average value of £193,117 (Q4 2004 = £194,925), a loan to value of 24% (Q4 2004 = 24%).
In the three months to 31st March 2005, the greatest value and number of plans were taken out in the South East (£92.8m/1707), South West (£56.8m/1014) and the North West (£50.1m/1229). The lowest number and value of plans were taken out in Scotland (117/£5m), the North (234/£8.3m) and Wales (273/£10.6m).
The fastest quarter on quarter growth in the value of new plans completed was in London (+38.69%), Scotland (+30.12%) and East Anglia (+24.41%). The growth in London reflects homeowners’ greater confidence in house price stability in the capital, following a lengthy period of uncertainty.
Reversion plan sales remained low, but rose significantly in Quarter 1 compared to Quarter 4, accounting for 8% of sales (Q4: 3.3%). It is likely that Reversions will become more popular this year, as awareness grows of the tough new SHIP code to protect reversion customers and significant new providers such as Norwich Union entering the market.
Dean Mirfin, Business Development Director of Key Retirement Solutions comments, “These figures provide further confirmation of the strength of demand for equity release, which has now been at record levels since July last year. The fact that equity release activity is highest in cities as widespread as Brighton and Sheffield, shows that the popularity of the product is not confined geographically, but has wide appeal to equity rich “Middle Englanders” across the nation.
“We expect business growth to continue strongly in 2005, as further new providers enter the market, and increasing number of people seek to supplement their retirement income.”
For a free and independent guide to equity release, or for more information call Key Retirement Solutions Free on 0800 064 7075.
