Drawdown mortgages grow in popularity
The members of UK equity release industry body, SHIP (Safe Home Income Plans), that represents over 90% of the Equity Release sector, report record first quarter figures to 31 March 2007 which demonstrate a marked growth in the market.Overall Business Figures
The total number of new equity release plans sold in Q1 2007 increased almost 7%, year on year, from Q1 2006 (6,363 - 2006 to 6,785 - 2007) and highlights the fourth year of consistent growth. The total value of new business written reached £293.9 million, the highest Q1 figure to date, and contributed to an annual rolling year total figure of £1,169.2 million at the end of Q1 2007.
Home Reversions
Home reversions continued to grow strongly with the number of plans sold increasing almost 14% from Q1 2006 to Q1 2007 (363 – 2006 to 413 – 2007) and accounted for £22.5 million worth of new business.
Drawdown Mortgages
Whilst lifetime mortgages accounted for 94% of new business for SHIP members in Q1 2007, it was drawdown mortgage options that persisted in popularity. These plans accounted for 40% of all new equity release business in Q1 2007 compared to almost 20% in Q1 2006 and 7% in Q4 2005, when drawdown schemes were first introduced.
During Q1 2007 £92.9 million was taken from £198.5 million committed new business compared to £45.1 million taken from £87.0 million of committed new business in Q1 2006.
Jon King, Chief Executive of SHIP commented: “The number of new equity release plans sold in Q1 2007 continues to increase, especially when figures are compared year on year with Q1 2006.
“Home reversion products are growing in popularity amongst consumers and with their formal regulation set in place earlier this month it is predicted that the number of these schemes taken will continue to rise markedly throughout this year and next.
“However, as the figures clearly show, it is drawdown mortgages that are proving the most successful of all equity release products available. The products’ flexibility allow individuals to draw only the amount they require at any given time without paying interest on what they don’t use. It seems customers are now becoming more aware of the potential of equity release and enjoying the degree of control that such products allow.”