Equity release market grows by 1.2% in Q3

There was a 1.2% increase in the equity release market's value in the third quarter of 2009 from £233.3m in Q2 to £236.2m in Q3, according to Safe Home Income Plans (SHIP).

The number of new equity release customers dropped by 2.5% quarter-on-quarter from 5,333 to 5,198. However, this is an increase of 2% on the Q1 2009 results.

This quarter also showed a 3.9% increase in the average amount released through equity release, rising from £43,746 to £45,434. This is a move that could be seen to reflect renewed consumer confidence in the stability of house prices.

In comparison to the wider remortgage market, which has seen a decline of 63%, this year has seen a 22% decrease in the value of the equity release market from £303.3m to £236.2m. However, as the number of customers has fallen by 35%, the average amount released per customer has increased by 19% from £38,189 to £45,434.

Andrea Rozario, director general of SHIP, said: “This has been a challenging quarter in a difficult year. However, it is encouraging to see how well the equity release market is holding up compared to the wider remortgage market.

“The drop in the number of plans sold can be partly attributed to the funding issues that the industry is currently facing. While equity release providers are experiencing high levels of customer demand, a significant impact on the quarter’s business figures has been the lack of liquidity in the overall market which has restricted the lending activity of some providers and resulted in the withdrawal from the market of some others.

“Following on from the launch of our discussion paper this summer, SHIP urges the Government to launch a review of equity release, and explore how it can take its appropriate place in the retirement planning sphere. SHIP is working hard to ensure that consumers, Government and funders are aware of the need for a retirement planning option based on property wealth, and how equity release can fulfill this need.”