Latest figures from our Market Monitor reveal strong year-on-year lending, with a 4.5% increase in plan numbers and 7.2% increase in value for the period January to September.
While the figures stand up well alongside other sectors, there is some way to go to get back to lending levels seen in 2007. The figures are 24% lower for plan numbers and 41% lower for overall lending compared with 2007.
The disparity between value and plan numbers has been driven by the popularity of drawdown plans, which now account for 74.5% of the market compared with 48.1% for the same period of 2007. The average amount released now is £39,953 against £48,957 in 2007.
Drawdown has been good news for consumers and we should be pleased with its effect on the sector. But the barometer for the market should rest with plan numbers.
Any lending market now differing by 24% against its position three years ago should be pretty chuffed with itself, especially where the purchase of products is driven by choice rather than need.
It should come as no surprise that the main demand for equity release is for home improvements with some 60% of consumers citing this for taking out a plan – almost double that for any other purpose. Funding for holidays takes second spot, followed by debt repayment.
This is also a positive message for the market – equity release has developed into a product that is a solution to a range of financial needs.