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Saturday 11th of July 2009
July 10, 2009

Equity release values plummet 41%


by Gill Montia
”Equity

Key Retirement Solutions has updated the equity release market with its latest monitor, showing that volumes are down for the second consecutive quarter.

In the three months to the end of June, the number of new plans sold fell an annual 24% to 5,143.

Furthermore, the property market downturn meant that the value of new lending plummeted 41%, from £319 million in the second quarter of 2008, to £189 million.

The average property value declined to £205,675 in the three months to the end of June, compared to £224,487 in the same period last year.

The average loan value therefore fell by 23% to £40,766, also reflecting stronger take up of drawdown plans which allow for a low initial release to be topped up by further funds when needed.

Equity releasers needed cash for the usual variety of reasons, with home improvements topping the list.

However, offering financial assistance to children took second place in priorities for the first time.

The average age for those entering agreements fell slightly during the second quarter of 2009 to 67, continuing a trend of the past two years.

Key Retirement group director, Dean Mirfin, comments: “We believe that the demand for equity release will continue, and following this turbulent period will return to, and then exceed, previous business levels.”

However, Key Retirement’s figures are a long way from predictions made at the beginning of the year by Safe Home Income Plans (SHIP), the body that represents the UK’s equity release providers.

According to SHIP’s research, firms in the sector expected business volumes to increase during 2009, expanding the market by £200 million in total, to £1.4 billion, by the end of the year.

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