Mortgage News Equity Release Figures From Bank Of England Misread
09 July 2008 / by Rachael Stiles
Figures published by the Bank of England last week regarding the release of value from homes are being ‘misread’ according to SHIP (Safe Home Income Plans), and are not specific to equity release products.
The statistics say that there was a 64 per cent fall in the year-on-year amount of money being taken from equity held in property through remortgaging for other purposes than buying another property.
SHIP wants to make clear that these figures do not, as has been construed by the media, apply to the volume of business in the bespoke equity release market, which has only experienced a comparatively small decline of 13 per cent.
The majority of this fall can be attributed to plummeting consumer confidence, the statement from SHIP says, which has suffered since the outbreak of the credit crunch almost a year ago, and the effects of which are now being seen.
SHIP’s members have been reporting that equity release volumes are proving to be relatively resistant to current economic conditions and are not suffering in the same way as the wider mortgage market.
The fall in remortgaging can be accounted for in part by the reluctance of lenders to allow loans given than there is currently an increased risk. However, SHIP wants to make clear that this is separate from the bespoke equity release market which is only available to those aged 55 or older who own their property outright, and the money is not repaid until the owner moves out of the home or passes away.
“Contrary to the first glance interpretations of the Bank of England’sstatistics published this week, we believe that the bespoke Equity Release market is relatively well positioned compared with the mainstream mortgage market.” said Andrea Rozario, director general of SHIP.
“Longer term the outlook is positive as a the result of the fundamental drivers of Equity Release demand being very strong – including the UK’s ageing population, declining pension contributions and significant personal wealth being held in equity in property.
These factors, she says, when combined with the current conditions in the mainstream mortgage market which will force the lending industry to seek alternative sources of business, “makes us confident the Equity Release market is well positioned for the future”.
© Fair Investment Company Ltd