UK equity release market shrinks by 9%

UK equity release market shrinks by 9%

Safe Home Income Plans (SHIP), the body that represents 90% of UK equity release providers, has reported that lending fell by 9% in value and 4% in volume in 2008.

New equity release plans for the year totalled almost £1.096 billion, in terms of value.

SHIP points out that the decrease is far less than that seen in the mainstream mortgage market, where lending declined by around 30% last year, according to the Council of Mortgage Lenders.

In terms of product type, home reversion schemes (which allow borrowers to release a percentage of the value of their homes) were down by 30%, while demand for lifetime mortgages fell just 2%.

Drawdown equity release products accounted for 55% of equity release plans sold last year, a 13% rise on a year earlier.

SHIP’s director general, Andrea Rozario, explains that a slight decline in business volumes in 2008 was to be expected given the turbulence in the economy.

She adds that overall, SHIP is pleased with how well the sector has held up.

Earlier this month, SHIP reported that nine out of 10 equity release firms expect new business volumes to increase during 2009, expanding the market by £200 million to £1.4 billion by the end of the year.

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