Equity Release to date - What has changed?

Now that the dust around the new equity release figures for 2007 has settled, I would like to mention some of the highlights from the Key Retirement Solutions equity release market report which provides some exciting food for thought on the equity release market.

The overall positive for the equity release market is that the total number of new plans has increased in 2007 over 2006 by 8.6% with total lending increasing by 23.5%. In total over 30,000 new equity release plans were taken out with a total borrowing figure of £1.4 billion. As reported throughout the year the average age of an equity release customer has continued to fall.

The average age fell during 2007 to 68.4 from 69.6 in 2006. Whilst this may not seem significant, this is the first time in the ten year history of the equity release market that there has been a fall. This not surprisingly coming during a year when the number of equity release plans being offered to those from age 55 has been at its greatest. In addition to this, we believe, this is the start of a trend which will continue as equity release solutions become more and more popular.

The figures for the year have revealed a shift in the levels of customers using equity release for debt repayment. The figures show that 40% of people taking out an equity release plan are using the funds released in whole or part for debt repayment. The highest cited reason for using equity release though still remains with home improvements with 58% of equity release customers spending some or all of the extra cash on their homes.

Sales of drawdown plans dominated the equity release market during 2007. Total sales of drawdown plans have accounted for more than half of all equity release sales compared to just over a quarter of sales during 2006. This reflects the greater range of equity release options available and the competitive pricing of these products.