People are still choosing to unlock the money tied up in their homes despite the global credit crunch, with equity release figures continuing to rise during the third quarter.
According to research by Safe Home Income Plans (SHIP) - the UK’s leading professional body for equity release product providers - nearly 8,000 people took out equity release plans in July, August and September 2007 which is a 15 per cent increase on the same time last year.
And this year so far (up to the end of September), people have arranged to unlock 31.24billion from their homes via equity release plans.
SHIP has 20 members, including Bradford & Bingley plc, Norwich Union and Standard Life and represents 90% of the equity release market. This quarter, the value of new business written by its members reached £325.3million, which is the highest quarterly figure since 2005.
SHIP’s data also showed that drawdown mortgage options have showed no signs of slowing. A drawdown mortgage allows the borrower to have an equity release plan, but they draw it down gradually, and only when they need it – SHIP has found that this type of plan now accounts for 51% of all new equity release plans sold, which is double the figure in Q3 2006 .
“This quarter’s figures demonstrate the continuing growth of the equity release market and its resilience to the present economic climate,” said Jon King, Chief Executive of SHIP.
“Unlike mainstream mortgage lending, equity release has the ability to ride out market turbulence and is set to increase in size by the end of the year. Consumer confidence in equity release is also protected with SHIP member products ensuring a ‘No Negative Equity Guarantee’.
“The growth in home reversion business is encouraging and is testament to the industry’s persistence in calling for full regulation of the market, “Mr King continued, “as these products become recognized as viable options for a population where life expectancy continues to increase the popularity in these products is expected to grow.”
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