As the mortgage market grinds to a halt and credit becomes hard to come by as a result of the credit crunch, it seems that equity release is one of few financial products to be enjoying success amid financial uncertainty.
Safe Home Income Plans (SHIPs), the trade body that represents more than 90 per cent of the equity release
market in the UK, has announced a surge in equity release business so far this year.
According to the results, equity release has seen a 14 per cent increase in popularity in quarter two compared to quarter one. In total, SHIP members released £275.7million worth of equity in quarter two compared to £242.7million in the previous quarter.
And, according to experts, its success comes as no surprise as people struggle to get by with an income, let alone on a dwindling pension fund.
Director general of SHIP, Andrea Rozario, said: "This success underlines the robust health of the equity release sector, despite the impact of the credit crunch that is having such a negative effect on the mainstream mortgage market.
"It also serves to highlight the distinctly different forces that drive the equity release market, relative to the mainstream market, including the fundamental pressures of the UK's ageing population, falling levels of pension contributions and the very high levels of personal wealth held in housing equity."
In fact, the equity release mortgage
market has proven so successful that experts believe it is set to get even bigger as pensioners turn to equity in their homes to fill the gap between their pension fund and the income they can survive on.
Ms Rozario added: "Despite the current fall in property prices, the very big increases of the past mean that typically, by far the biggest asset held by people later in life is equity in their home. This latest rise in volumes may have been influenced by people wanting to accelerate their plans to release equity for fear of property prices falling further over time, or it may have been simply the increasing pressure on finances cause by rising prices that are often felt hardest by those in or nearing retirement."
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