Equity Release Council figures show total advances of £224.8m
were recorded in Q2 2012 - 22% up on Q2 2011 (£184.8m) and 13% up
on Q1 2012 (£199.0m).
This is also the highest amount of equity released in a single quarter since Q4
2009 (£231.7m).
The number of plans sold grew to 4,302 which is 6% up on Q1 2012
(4,057) and 16% up on Q2 2011 (3,710).
The proportion of customers who choose drawdown plans has
continued to increase and they now account for 68% (Q2 2012) of the
value of the market (Q1 2012 - 67%). Lump sum mortgages count for
32% (Q2 2012) of the market and home reversions account for 1% (Q2
2012).
This is a significant increase in the number of drawdown plans
in just three years (48% - Q2 2009) and highlights how people's use
of Equity release is gradually evolving. While at
the height of the property boom consumers chose to take out large
lump sums, post-credit crunch they are increasingly cautious.
Indeed, it appears that people are choosing to take smaller
tranches of funds over a longer period - possibly to augment their
income or pay for one off expenses - rather than taking out a large
lump sum.
While the equity release market grew the proportion of direct
(10% or £23.1m) versus intermediary (90% or £201.7m) business
remained steady for the third consecutive quarter.
Andrea Rozario, director general of The Equity Release Council,
said: "This quarter has been the most successful period for the
equity release market in two and a half years. This clearly shows
that there is an appetite for these products and that as life
returns to the UK mortgage market, the equity release market is
also returning to growth.
"Obviously we are not out of the woods yet and much work still
needs to be done to improve consumer understanding of these
products. However this quarter's figures indicate that more and
more consumers are going to be using their equity to improve their
standard of living and pay for costs in retirement.
"Indeed we've seen the market start to evolve and more people
are choosing drawdown products rather than lump sum plans as they
choose to release equity strategically to pay for specific
expenses. 2012 has already been a big year for the Equity Release
Council as we rebranded and expanded our membership in June and
these figures put us on track to celebrate a very successful
year-end."
Roger Marsden, head of at retirement at Aviva, said: "Today's
figures from the Equity Release Council clearly show that using
housing equity to improve retirement finances is becoming
increasingly popular. This is good news for not only the market in
general but also for consumers.
"Many facing retirement with a shortfall in their savings are
often worried about releasing the equity in their homes to improve
their standard of living. However due to concerted efforts from the
Equity Release Council, providers and intermediaries alike
attitudes are changing. With the reassurance of no negative equity
guarantees and the introduction of inheritance guarantees, more
people are now taking a holistic view of all of the assets
available to them at retirement, including the value held in their
own property.
"We believe that today's figures signal a return to positive
growth for this market and we expect that 2012 will be a better
year for equity release than 2011."
And Claire Barker, chairman of Equity Release Solicitors'
Alliance, said: "These figures are great news for the equity
release industry and vindicate the hard work specialists have been
putting in. Commentators have long predicted that equity release
would come into its own as a major part of retirement planning and
these figures indicate that this is perhaps starting to be the
case.
"The launch of the Equity Release Council has harnessed the
varied talents of specialist advisers, solicitors and providers and
galvanised their efforts to their obvious collective benefit. An
increased focus on raising the profile of the industry both among
consumers and in the corridors of power is paying dividends.
"It is important that with the industry growing the highest
standards are maintained as more and more consumers engage with
equity release. As the number of players in the market decreased
during the credit crunch it left a core of specialist advisers and
solicitors which has created an excellent standard of financial and
legal advice. As the industry expands we must continue to expect
excellence to build on the much improved reputation the industry
now rightfully enjoys."
