Equity release advances fell by 8% in the final quarter of 2010 after a positive Q3 (+4%), according to latest data from SHIP, the equity release trade body.
Data from SHIP members also showed that during Q4 market share held by the respective product types remained stable. Drawdown mortgages (Q3 2010 – 57% and Q4 2010 – 57%) continued to dominate sales followed by lump sum products (Q3 2010 – 41% and Q4 2010 – 41%) and reversion plans (Q3 2010 – 2% and Q4 2010 – 2%).
In addition to the type of product sales remaining relatively steady, the average amount released saw a slight drop (Q3 2010 – £46,754 vs. Q4 2010 – £45,218). SHIP believes that this 4% fall can be attributed to customers taking out smaller amounts due to the economic environment engendering a more cautious approach to retirement finances and the release of equity.
While intermediaries (81%) still account for by far the majority of equity release products sold, direct sales did increase marginally by 1% from 18% (Q3 2010) to 19% (Q4 2010) as the market worked to recover from provider withdrawals earlier in the year. Indeed, direct sales fell by 30% from 2009 (£224.76 million) to 2010 (£157.97 million) as a sector which accounted for 27% of sales in Q1 2009 fell to 19% of sales in Q4 2010.
SHIP claims that during 2010, the unease felt by UK consumers due to house price fluctuations, the uncertain economic climate and the withdrawal of a major direct provider had a negative impact on the value of the equity release market. There was a fall of 15% from £946 million in 2009 to £804 million in 2010.
Andrea Rozario, director general of SHIP, said: “In Q4 2010
