Latest figures from SHIP, the equity release provider trade body, for Q3 2010 show an improving outlook for the sector, with a 4.2% increase in total advances up from Q2.
Over this period, the value of the equity release market increased from £196.7m (Q2 2010) to £205m (Q3 2010) – the largest quarter on quarter increase since mid-2008. In addition, to the increase in value of the market, the average release also increased by more than £1,000 up from £45,702 (Q2 2010) to £46,754 (Q3 2010).
Drawdown mortgage sales have climbed marginally and now account for 57% of the entire equity release market (Q2 2010 – 56%). While sales of this type of product and those of reversions have increased, the sales of lump sum products – which account for 41% of the market – have fallen marginally (Q2 2010 – 42%).
This is a significant change from the picture two years ago when lump sum products accounted for 56% (Q3 2008) of the value of sales. SHIP believes this change may in part be due to the fact that some consumers are reluctant to take out significant one-off amounts of housing equity when the continued growth of the residential property market is uncertain. Changes to the number and range of product providers over the last two years is also clearly highlighted.
Over this period, intermediaries sold 82% of all equity release products (+1% on Q2 2010) and direct sales forces sold 18% (-1% on Q2 2010).
Andrea Rozario, director general of SHIP said: “The equity release market has returned to growth with the largest quarter on quarter increase since mid-2008. The financial services industry has had a tough couple of years and this move clearly illustrates increased customer demand. It also shows that the work undertaken by SHIP – and its members – to increase the wider acceptance of this product range is having an impact.
