SHIP records 8% fall in equity release market value

Safe Home Income Plans (SHIP), the trade body for equity release providers, has published its equity release market figures for the fourth quarter of 2010.

Economists’ forecasts that the housing market will remain flat or fall marginally in the short term because of the lack of funding and the threat of increased interest rates was reflected in the figures, which saw fourth-quarter advances fall by 8% after a positive third quarter (+4%).

Data from SHIP members also showed that market share held by the respective product types remained stable during the fourth quarter. Drawdown mortgages, flat with the third quarter at 57%, continued to dominate sales, followed by lump sum products, again flat at 41%, and reversion plans, steady at 2%.

The average amount released saw a slight drop from £46,754 in the third quarter to £45,218 in the fourth (-4%). SHIP believes the decline can be attributed to a more cautious approach to retirement finances and the release of equity.

Andrea Rozario, director general of SHIP, said: “In Q4 2010, we have seen the traditional festive market retraction as people take holidays and put off financial decisions until the following year.

“This was exacerbated this year by the extreme weather conditions which hit the housing market as a whole.  The early indications suggest January is returning to more active levels.

She added: “The last few years have seen unprecedented world economic turbulence, but we are confident that as the government and the private sector work hard to foster stability, the equity release market will follow suit.

“The market and consumer fundamentals are clear for all to see. With an ageing population who are living longer but have inadequate pension provision and significant housing equity, the equity release market has huge potential to help financial advisers and customers close the retirement planning gap.”