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It’s been a tough year for equity release

One year on from regulation the equity release market has seen a tough period throughout with business levels on a plateau. Business this year is expected to remain at similar, or slightly lower, levels than 2004.

The latest Market Monitor from Key Retirement Solutions for Q3 shows the value of outstanding lifetime mortgages has hit the 5bn mark for the first time. The value of equity release plans grew by 4.2% from 286m during Q3 (Q2 2005) to 297m. The growth in this three-month period brings the value of plans sold in 2005 to 818m which puts the industry on track to exceed 1bn worth of new business by year-end for the second year running (2004: 1.4bn).

The average amount of equity released increased over Q2, growing from 44,651 (Q2 2005) to 47,989 (Q3 2005). But the disappointment for the period is that the number of plans sold fell from 6,316 (Q2 2005) to 6,106 (Q3 2005). The indicators are that this is because many consumers struggle to gain access to advice on equity release and therefore delay making a decision with regard to purchasing these products, further highlighting the fact that advisers are still shying away from this market.

The message appears to be starting to hit home regarding reversion products as, while their share of the overall market is low, if current levels of business continue, the number of reversion plans sold during 2005 should exceed 2004 figures.

This must in part be attributed to Norwich Union which launched its home reversion scheme earlier this year.

Regional highlights for the period are:

l Fastest quarter on quarter growthWest Midlands: 75.28%

Wales: 68.48%

South-West: 23.14%

l Largest fallsScotland: 37.83%

East Midlands: 36.51%

These regional variations tend to reflect previous under or over-performance.

Intermediary generated business rose for the quarter but only marginally, to 64.65% of the market.

This figure is still of concern with one in three plans being arranged direct with providers. In a market which should be heavily advice-based and with product suitability being such a sensitive part of the sales process, more of the market should be via brokers.

This indicates there is still a considerable share of business for brokers to pick up.Dean Mirfin is business director at Key Retirement Solutions


Paul Hunt, head of marketing, Platform

“Intermediaries are now far more reliant on lender online technology than before. And despite predictions to the contrary before M-Day, packagers are still here and still thriving.”

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Apple: a stellar technology story

By Ali Unwin, head of technology sector research

Apple recently announced the highest-ever recorded quarterly net profit ($18bn), with the sale of 74.4 million iPhones helping the company deliver $74.6bn of revenue for the quarter ending December 2014. These sales were largely driven by strong demand for the new iPhone 6 and iPhone 6 Plus. Highlights included Chinese iPhone sales doubling year-on-year and unit growth of 44% in the US — supposedly a well-penetrated market. Apple ended the quarter with $178bn in cash on its balance sheet, having generated a staggering $30bn in free cash flow during the quarter.

At Neptune, we have been long-term believers in the Apple story, and continue to hold the stock in a number of our portfolios based on the company’s long-term growth prospects. This is predicated on our belief that Apple has proved thus far that it can — unusually for a consumer electronics company — maintain high margins for a sustained period of time, even as adoption of new technology slows down and competitors produce similar-specification products.


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