Twitter Facebook RSS FEEDS

Equity release booming amid bust?

Monday, 7 July 2008 12:00 AM

New research from the UK's largest equity release organisation finds the market remains robust, despite concern over the health of the wider market.

However, the Bank of England recently said the market had continued a period of stark decline - so what is the truth behind the figures? Chris O'Toole investigates.

Industry finds positive signs

The quarterly market monitor from Key Retirement Solutions (KRS) finds the amount of equity released by retirees in the second quarter of 2008 was £390 million, a 13 per cent increase year-on-year.

Furthermore, the number of plans taken out in the second quarter of 2008 increased by 6.67 per cent compared to the same period the previous year, exceeding more than 8,000 plans.

"During the first quarter of 2008 we experienced a decrease in the number of plans and overall lending in the equity release market," said Dean Mirfin, business development director at KRS.

"Throughout this period however comment from providers and advisers indicated that enquiries were on the increase towards the end of the quarter.

"This has been born out in our latest market monitor: the results of an increase over quarter one were to be expected, however the result for the second quarter compared to the same period last year are most defining."

The growth of the market can be partially explained by the creation of new, increasingly flexible, products - with the drawdown sector (whereby a consumer 'draws down' the cash in stages as and when they require it) key among them.

Such products are now viewed as an "essential" element of an organisation's product portfolio, and have seen strong growth over the year to date - increasing market share from 50 to 59 per cent over the last year.

"While lending in the mainstream mortgage market continues to decline month on month, and in comparison to last year, it is good to see some positive news in the lending arena," continued Mr Mirfin.

"The figures show that demand for equity release is strong, and positively, lenders are able to lend to those who want to release money from their homes."
London and the south-east remain the strongest market for equity release products.

According to KRS some £102 million was released in the south-east during the second quarter of the year, up 22 per cent on the previous year, while London saw lending of £53 million.

However, Bank says no

However, the figures appear to contradict those of the Bank of England .

Just £5 billion was released by the equity release sector during the first quarter of 2008, accounting for 2.2 per cent of income after tax of UK residents, according to the latest figures.

This was the lowest level since the second quarter of 2001.

Yet, Safe Home Income Plans (SHIP) - the trade body for regulated Equity Release product providers - has since sought to clarify these figures further, explaining the figures are not for bespoke equity release products, but for all re-mortgages for purposes other than a new house purchase.

While acknowledging lending did slip 13 per cent in the first quarter of the year, most of the decline was attributed to the impact on consumer confidence caused by the collapse of Northern Rock and the dramatic beginnings of the credit crunch.

"Contrary to the first glance interpretations of the Bank of England's statistics published this week, we believe that the bespoke equity release market is relatively well positioned compared with the mainstream mortgage market," argued Andrea Rozario, director general of Ship.

"Longer term the outlook is positive as a the result of the fundamental drivers of Equity Release demand being very strong - including the UK's ageing population, declining pension contributions and significant personal wealth being held in equity in property."

So, it appears, while the equity release sector is slowing, it remains well ahead of the wider market.

Related stories

New home

Buying a new-build home through shared equity

This week's guest columnist explains how shared equity schemes could assist first-time buyers hoping to get on the property ladder.

 British soldiers marching

Battling to borrow: Mortgages for the military

It can be difficult to obtain a mortgage if you're in the Armed Forces. Here, we explain steps you can take to buy your own home.
Man looking round a house

First-time buyers' guide to FirstBuy

We explain how the Government's new shared equity scheme works, how much money you can borrow and who qualifies.

 Shared equity scheme offered to help first-time buyers

Government expands Open Market HomeBuy, but what impact will it make?

Two year's after the launch of the Open Market HomeBuy scheme will a new government initiative change anything? Chris O'Toole investigates.
Sale and rent back schemes can prey on the vulnerable

Are property sale and rent back schemes the answer to spiralling debts?

'Sale and Rent Back' schemes might seem to be the solution if you can no longer afford to pay your mortgage but as Christine Toner discovers they sometimes prey on the vulnerable and there are often better alternatives.

 If this isn't really of interest then you might be better off letting your home for a few weeks.

Olympic Property Letting: The tax implications

We've all heard about the promised rental bounty for landlords who own a property near London's Olympic park, but what are the tax implications?
Hereford Cathedral

Downsizing to release equity not always practical

Gains from downsizing do not stack up for over-55s in one in three areas, says study by equity release group SHIP.

 No matter how idyllic your home, a blue carpet will not do you any favours. Image:Thinkstock

Why is my house not selling?

Selling your home is a difficult process... here are the seven deadly sins which could be putting off potential buyers.
The average amount of equity released by home owners was little changed at £49,703 but the figure was 6 per cent up on this time last year.

Equity release market grows by 10 per cent

Providers lend more than £200 million in third quarter as home owners look to release cash tied up in their property.

 Homeowner Mortgage Support Scheme launched

Homeowner Mortgage Support Scheme launched

Sarah Garrod looks into whether the scheme will really aid those at risk of losing their homes.

Search property

Headlines

Directory

Alaris

Alaris Logo
Alaris specialise in quality Bathrooms and Kitchens along with many other unique products for your home. The range of kitchens, kitchen worktops and bathrooms is extensive and the highest quality so you are sure to find what you want. New bathroom furniture, bathroom suites, taps, showers and cabinets are added regularly.

Bathrooms365

Bathrooms365 Logo
Bathroom365 supply all areas of your new bathroom - leading-edge designed bathroom suites, stylish bathroom taps and showers, all styles and forms of shower enclosures and a vast collection of bathroom furniture.

Fitmykitchen

Fitmykitchen Logo
Fitmykitchen are specialist suppliers of kitchen appliances, sink taps, waste bins and furniture. So whatever you want from kitchen sink taps to waste bins look no further than fitmykitchen, UK, the specialist suppliers of kitchen appliances, stainless steel sink taps, waste bins and kitchen furniture.

MyStampDuty

MyStampDuty Logo
We help people buying property all over the UK to minimise Stamp Duty Land Tax on residential and commercial property. If you are looking at purchasing a new home or business premises over £500,000, contact us today by completing the form on the right

Oak Furniture Land

Oak Furniture Land Logo
For hardwood furniture, including Solid Oak, Mango, Mahogany, Sheesham, Acacia, Ash and Birch, look no further than Oak Furniture Land.

Rated People

Rated People Logo
Whatever type of home improvement or garden remodelling project you have, Rated People can help you to identify the right tradesmen for the job in a way that is quick, easy, convenient and, as it is based on real-life recommendations, trustworthy.

Residential Land

Residential Land Logo
If you are looking for short or long term rentals in Central London, Residential Land have a portfolio of over 1200 flats and houses in the best postcodes across the Capital.

Simply Bedrooms

Simply Bedrooms Logo
Simply Bedrooms, a part of Sleepwell Bedrooms Ltd, supplying quality beds, wardrobes, sliding door wardrobes and bedroom furniture at low prices and great service, London and Home Counties Specialists.

Door Handles UK

Door Handles UK Logo
Door Handles UK is the UK's largest online range of Door Handle accessories, Door Hinges, Locks and Latches and so much more and all at genuine internet prices. We have a wide range of Chrome, Brass and Glass Crystal Mortice door knobs in both traditional and contemporary designs, whatever your taste and budget you will find a design to suit.

Woodlands Furniture

Woodlands Furniture Logo
We are an established family business situated in rural Herefordshire specialising in beautiful handcrafted classic reproduction furniture. Our comprehensive ranges are readily available from stock.

WowBBQ

WowBBQ Logo
Welcome to the World of Weber. We are the largest independent online Weber BBQ retailer in the United Kingdom. WOWbbq.co.uk is a Weber Partner Store and can give you the best advice for all your Weber BBQ needs.

Join our directory aboutproperty.co.uk

Twitter

Join the conversation at #aboutproperty

Directory articles

A guide to finding the right kitchen sink

When redesigning a kitchen or giving the room a makeover, it is important not to forget about the less obvious aspects of the space. Kitchen sinks are an essential fitting, but often overlooked, despite the fact there is a wide choice of styles available.

Useful tips to help find a flat in London

Looking for flats in London can be a frustrating process, given the capital's size, demand for rental accommodation and varying prices. It is vital, therefore, that you do plenty of research and act quickly to ensure you get the place that you want.

What do you need to consider when buying a mattress?

If you looking for a new mattress, you need to get the decision right, as getting it wrong could impact on your overall health and wellbeing. As well as comfort and size, you also need to consider other points, such as any health issues you may have.