Equity release mortgages up 5%

Tuesday, 05 February 2008 12:00

Equity release mortgages enjoyed a boom in 2007 seeing a rise of five per cent in new business.

Sales of equity release products via intermediaries, such as advisers and brokers, soared by 25 per cent in the year while the number of products being sold via direct sales forces fell from 12,973 to 10,762. This was driven by an influx of intermediaries entering the market.

But figures published by Safe Home Income Plans (Ship), an organisation which represents 90 per cent of the equity release sector, also found that the jittery economy took its toll on the sector as the year concluded.

The total value of business written in quarter four - October to December 2007 - was £288.9 million, nine per cent lower than the same period in 2006.

Ship thinks this fall is connected to the Northern Rock crisis and said it was less dramatic than the drop of 12 per cent in gross lending experienced by all mortgage lenders from quarter three to quarter four.

In fact, Ship believes the figures were positive and showed equity release was "well-placed to prosper against the backcloth of the credit crunch".

Andrea Rozario, director general of Ship, said with the rising cost of living places increasing pressure on pensioners and the average pension fund size falling he expected equity release to be in greater demand in 2008.

She said: "Increasing numbers find themselves in retirement yet still servicing mortgages and other personal debt. Equity release will represent a positive financial solution to more and more people, who have unprecedented property wealth to benefit from."

Ms Rozario said there was now a greater choice of equity release products on the market and the competitiveness of rates had never been greater.

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