Higher equity release sales in 2010

New research shows that equity release sales rose 3.36% in 2010 to 22,020 plans compared with 21,305 plans in 2009. According to Key Retirement Solution’s 2010 Equity Release Market Monitor, this is the first increase since 2007.

However, the amount of equity released fell 11% to £910.6 million compared with £1.02 billion in 2009. This has been attributed to the rise in popularity of drawdown plans, which represented three-quarters of equity release sales in 2010 compared with two-thirds in 2009. The average amount of equity released was £43,519 in 2010 compared with £48,212 the previous year.

The two most common uses for the funds were home and garden improvements (59% in 2010, 56% in 2009) and holidays (34% in 2010, 33% in 2009). The third most popular use for the money was helping out family members (23%).

Group director at Key Retirement Solutions, Dean Mirfin, said: “Customers are benefiting from the flexibility and favourable terms offered by drawdown and overall the equity release market was able to end three years of decline last year in the number of plans sold.

“The true barometer for the industry clearly rests with the number of plans sold rather than total amount released. The products available to consumers today naturally make equity release a more attractive option through the overall flexibility available and greater control over the cost of borrowing.

“Drawdown is now realising its potential in the equity release sector and still remains as one of the greater product innovations that the market has seen.

“Innovation by providers including the launch of products offering enhanced terms for customers with medical or lifestyle conditions plus increasing use of drawdown all adds to more competition among providers which points to further potential growth in 2011.”