Value of Equity Released Increased by over 10% in a Quarter

Lump Sum Popularity Grows

18 October 2012:  The Equity Release Council (The Council) reports that market figures for the third quarter of 2012 show significant growth in both volumes and value.

Advances Grow by Over 10% Quarter on Quarter:

In Q3 2012, total advances of £248.9m were recorded which is 11% up on last quarter (Q2 2012 – £224.8m) and 21% up year on year (Q3 2011 – £206.1m).   This is also the largest amount of equity released since Q4 2008 (£274.1m) and indicates that as life returns to the residential mortgage market, the equity release market is following suit.

The number of plans sold also increased from 4,302 (Q2 2012) to 4,777 (Q3 2012) which is the highest number since Q4 2009 (4,888).

Lump Sum Stages a Resurgence:

While drawdown mortgages continue to account for the largest percentage of the market (Q3 2012 – £161.9m or 65%), the Council has also seen an increase in the number of Lump Sum mortgages sold (+3% to 35% or £86.1m – Q2 2012).  With an increasing number of people using equity release for ‘big ticket items’ such as the repayment of debt (mortgage or unsecured) or household renovations, this is a trend which is likely to increase.

Proportional value of plans sold:

Q3 2012

Q2 2012

Lump Sum

35%

32%

Drawdown

65%

68%

 

Distribution Channels Remain Steady:

While the equity release market grew, the proportion of direct sales (£25.6m or 10%) and intermediary sales (£223.3m or 90%) remained steady.

Andrea Rozario, Director General of the Equity Release Council said:

“Q3 is traditionally one of the strongest quarters in the equity release calendar and today’s figures highlight the fact that the market is firmly back on track for sustained growth.  If we see more than £200m worth of equity released in Q4 – something that we are on track to do – then this year we will out-perform both 2011 and 2010.

“This indicates a renewed consumer interest in these products and is excellent news for the market – as well as The Council.   All the signs support the fact that people will need to factor in their housing equity when they plan for their retirement and the recent upsurge suggests this message is being heard.

“2012 has been a big year for the Equity Release Council as we rebranded and expanded our membership and today’s figures highlight the true potential of this market.”

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