There was significant growth in both volumes and value of the equity release market in the third quarter of 2012, according to the Equity Release Council.
In Q3 2012, total advances of £248.9m were recorded which is 11% up on last quarter (Q2 2012 – £224.8m) and 21% up year on year (Q3 2011 – £206.1m). This is also the largest amount of equity released since Q4 2008 (£274.1m).
The number of plans sold also increased from 4,302 (Q2 2012) to 4,777 (Q3 2012) which is the highest number since Q4 2009 (4,888).
While drawdown mortgages continue to account for the largest percentage of the market (Q3 2012 – £161.9m or 65%), the Council has also seen an increase in the number of Lump Sum mortgages sold (+3% to 35% or £86.1m – Q2 2012).
The Council says that with an increasing number of people using equity release for ‘big ticket items’ such as the repayment of debt (mortgage or unsecured) or household renovations, this is a trend which is likely to increase.
|Proportional value of plans sold:||Q3 2012||Q2 2012|
While the equity release market grew, the proportion of direct sales (£25.6m or 10%) and intermediary sales (£223.3m or 90%) remained steady.
“Q3 is traditionally one of the strongest quarters in the equity release calendar and today’s figures highlight the fact that the market is firmly back on track for sustained growth,” said Andrea Rozario, director general of the Equity Release Council.
“If we see more than £200m worth of equity released in Q4 – something that we are on track to do – then this year we will out-perform both 2011 and 2010.
“This indicates a renewed consumer interest in these products and is excellent news for the market – as well as The Council. All the signs support the fact that people will need to factor in their housing equity when they plan for their retirement and the recent upsurge suggests this message is being heard.
“2012 has been a big year for the Equity Release Council as we rebranded and expanded our membership and today’s figures highlight the true potential of this market.”