Equity release sales up 3.8% year-on-year
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The number of sales for equity release plans totalled 5,791 in Q3 2011, up 3.8% on the 5,574 sold during the same period last year, according to research from Key Retirement Solutions.
The initial amount released totalled £261.3m in Q3, up 1.8% on Q3 2010’s figure of £256.5m.
Across the whole market, the average amount released was £41,887, down by 14.3% from £48,884 in 2010.
Drawdown products accounted for 71.5% of new business in the three months to September, while lifetime mortgages took a 26% share and reversions took a 2.5% slice.
The proportion of customers using some or all of the money from equity release from home or garden improvements fell from 66% in 2010 to 55% in Q3, while the percentage using it for holidays or to clear debts was virtually unchanged.
Dean Mirfin, group director at Key Retirement Solutions, says: “The shift in the market towards drawdown products means that total lending including the unused facility is more than £1bn for the first nine months of the year, confirming the strong growth in the market.
“Specialist advisers and customers need to focus on drawdown and whether a lump sum is what they need.
“The majority of clients drawdown funds in the first few years of having taken a plan for a variety of reasons so it is right to factor the reserve into the overall lending levels and to make drawdown the focus for new business. The increase in plan numbers remains the true barometer for the growth in the sector.”
The research shows that eight out of 12 regions in the UK saw growth in the number of plans sold and five regions saw growth in total initial lending.
The average initial LTV for drawdown plans was 13.7% and the average overall LTV facility was 25.6%.
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