Last year UK retirees unlocked £1.18billion from their properties through equity release.
The figure signifies a 14 per cent decrease compared to the total £1.39billion released in 2007, but experts predict figures will rise again in 2008/2009.
The Key Retirement Solutions' 2008 Equity Release Market Monitor has revealed that there were 25,790 equity release schemes
taken out in 2008, a 14 per cent fall from the 30,089 that it counted the year before.
The average value released from each property in the last quarter of 2008 was £47,341, a 10 per cent fall compared to the same period in 2007.
While the lifetime mortgage
market has not escaped unharmed by the credit crisis, it has not experienced the same downturn as the wider mortgage
market; in November last year, mortgage lending saw a year-on-year decline of more than 50 per cent, according to the Council of Mortgage Lenders.
Standard lifetime mortgages might have taken a hit, but 2008 was a good year for Drawdown equity release
products, whereby a consumer takes the cash in stages, which increased by nine per cent last year, and now accounts for 60 per cent of the market.
Key Retirement Solutions has bucked the trend of decline in the equity release
market, reporting a two per cent rise in the number of plans taken out, with a four per cent increase in value year-on-year. It now holds a 25 per cent share of the equity release market.
Dean Mirfin, group director at KRS, said: "Whilst 2008 for the mainstream mortgage market saw a considerable and ongoing decline in the levels of new mortgage business, by comparison the equity release market has had a more resilient year.
"The past year proved tough for all financial service sectors, however the results for the equity release market show that demand is still strong despite a year of house price deflation and understandably issues of confidence amongst consumers.
"The industry is well placed as we enter 2009 with a healthier level of enquiries compared to the same point in 2008."
According to SHIP (Safe Home Income Plans), the coming years will see the equity release market bounce back, predicting that it will grow by £200million a year, reaching £1.4billion this year and £1.7billion in 2010.
The Market Monitor revealed that the most common uses of the money generated by equity release plans include paying off other debts, household bills, making home or garden improvements, going on holiday, and helping out family and friends, especially their children, which have struggled to keep up with the cost of living as the credit crunch continues.
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