Confidence in the Equity Release Market Grows
Figures released by Safe Homes Income Plans (SHIP) indicate that equity release schemes are growing in popularity as the market stabilises.
The statistics, pertaining to the fourth quarter of 2009 compared to the third, show that there was only a slight decline (1.9%) in the number of plans sold. However, Q4 is notoriously a weaker period due to seasonal factors.
So, despite the slight decline, there is encouragement that in the most difficult period of the year, the number of equity release schemes started to level out. There was also a 4% rise in the average amount advanced for the period.
An Increase in Home Reversion Equity Release Schemes
Home reversion equity release schemes showed the most encouragement as sales grew by 28% quarter on quarter. In a time of unsettled house market prices, only selling a portion of your property has proved popular with homeowners.
Drawdown mortgages increased by 5% to 3,057 in Q4 maintaining their position as the most popular equity release scheme, which now accounts for 54% of the market. Drawdown equity release schemes offer customers flexibility to choose when they want their money and how much.
The Equity Release Solicitor’s Alliance (ERSA) is encouraged by the figures. Claire Barker, chairman of ERSA, said:”Overall, these are remarkably positive results for the industry and indicate that there is still a major appetite from home owners to supplement their retirement income by using the equity in their property.”
“The reputation of the equity release market is steadily improving”
Andrea Rozario, director general of SHIP, said: “The equity release industry, in common with the entire UK financial services industry, has faced a difficult and challenging year. However, there are encouraging signs with both providers and IFAs having recently reported increasing demand from consumers.
“Finally, SHIP has had a number of positive meetings with key stakeholders and can confidently assert that the reputation of the equity release market is steadily improving. We remain positive in the future growth of the equity release market.”
The figures still show that the number of plans released is some way short of 2008 figures but, in what has been a difficult year for the equity release market; this strong finish shows encouragement for 2010.
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