The equity release sector has remained buoyant, despite several providers dropping out of the market, according to trade body SHIP.
Demand for equity release remained strong in the first quarter of 2010, seeing £213.4million of sales, but, like the wider mortgage market, SHIP suspects that the equity release sector was affected by the bad weather which kept people away.
SHIP (Safe Home Income Plans), the equity release trade body, recorded that the equity release market has been suffering from losing several providers which have dropped out of the market, and activity subsequently fell eight per cent, compared to the last quarter of 2009.
But in terms of total number of customers, business saw a modest quarterly decline of 3.5 per cent – from 4,888 to 4,716 – which SHIP said was to be expected due to the number of providers that have withdrawn, suspended, or limited their range of equity release products.
Drawdown equity release – where homeowners borrow against their property but release the value gradually to boost their income – maintained its status as the most popular form of retirees unlocking cash from their homes without having to move, representing more than half of the market with £116.4million of sales.
Meanwhile, home reversion equity release schemes – where the homeowner sells a portion of their property, the proceeds of which can be taken in a lump sum or as income – saw a 10 per cent rise in popularity, accounting for £4.4million of equity release revenue.
Commenting on the figures, Andrea Rozario, director general of SHIP, said they illustrate that "despite the withdrawal of some big providers from the market the equity release market remains robust. The bad weather at the beginning of the year has also obviously had some impact on the first quarter results with conditions making business difficult but reports from members now show a very strong run rate."
Ms Rozario also expects more providers to enter the market this year and replace those which have left. "SHIP is confident that over the course of the year the market will remain strong," she added.
Dominic Fraser-Smith, from equity release provider Aviva, agreed with Ms Rozario's belief that the fall in the equity release market is a reflection of providers leaving the market due to the current economic climate, "as opposed to a fall in demand for equity release products."
© Fair Investment Company Ltd
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