An 8% drop in equity release business has been blamed on big providers exiting the market in the past few months.
The size of the equity release market fell 8% in Q1 2010 and now stands at £213.4m, compared with £231.7 in Q4 2009, latest figures from Safe Home Income Plans show.
The total number of equity release customers remained stable with a fall of just 3.5% quarter on quarter from 4,888 to 4,716.
Home reversion advances rose 10% on Q4 2009 to £4.4m. Drawdown mortgages remain the most popular form of equity release, claiming over half of the market share at 55%, with £116.4m in advances.
Overall, the value of the equity release market has fallen by 13% from £244.7m in Q1 2009.
Dominic Fraser-Smith, retirement manager at Aviva, says: “This slight fall in market size is due to providers dropping out of the market as opposed to a fall in demand for equity release products.
“We are committed to the market and have had a positive start to the year.”
He adds: “We also believe that the ageing population and ongoing shortfall in pension provision will lead to equity release becoming a mainstream retirement funding vehicle in future as demand for the product continues to rise.” He adds that the firm expects to see the market recover in 2010 and possibly new entrants in the sector.
Andrea Rozario, director-general of Safe Home Income Plans, says: “Despite the withdrawal of some big providers, the equity release sector remains robust. The bad weather at the start of the year also had some impact on Q1 results but reports from members now show a strong run rate.
“SHIP is confident that over the year the market will remain strong and it is even possible that new entrants will appear from the middle of the year onwards.”