Equity release growth continued in the first quarter of 2012 with both plan sales and total lending rising, according to analysis from Key Retirement Solutions.
Total lending rose to £217.1 million in the first three months of 2012. KRS said this would reach the £300 million mark if £83.8 million of untapped drawdown funds which have yet to be released are added in.
Plan sales rose 6.4% to 4,508 in the three months compared with 4,237 for the same period of 2011 while growth in total lending was 1.7% from £213.48 million in the first three months of last year.
Growth in plan sales was nearly four times faster than growth in total lending underlying how increasing use of drawdown is driving growth across the equity release market.
Drawdown sales made up 66% of total sales in the first quarter compared with 55% for the whole of 2011, enhanced drawdown and single advance enhanced sales also made up 10% of the market.
Dean Mirfin, group director at Key Retirement Solutions, said: “As the return to recession hits home to those on fixed incomes it comes as no surprise that in the first quarter of this year we have seen a further increase in the levels of equity being released, importantly the increase in the levels of drawdown are significant allowing greater flexibility for borrowers. The levels of enhanced equity release, now accounting for a 10% market share, are also growing in significance.
“Helping out family members still accounts for almost 1 in 4 of all plans taken out during the period showing that equity release is helping across generations during these testy financial times.”
Home and garden improvements remained the most popular use of equity release money; 57% of customers used some or all of the cash for that with 33% using money to clear debts and 31% to help fund holidays.
Across the country six out of 12 regions saw growth in the total number of plans sold with the North seeing growth of 65% and the East Midlands 53%. Wales saw a 13% fall in sales.
The biggest growth in total value released was in London where total value increased by 45.7% while the East Midlands saw totals climb by 43.7%. In total four out of 12 regions saw rises.