The amount of equity released in the UK via equity release products has risen by a third in the first half of 2007 due to rising house prices, according to the UK Equity Release Market Monitor.
The market monitor, compiled by Key Retirement Solutions (KRS), shows total demand for equity release products increased by 18% in the first six months of 2007, while the amount released grew by 33% compared with the first half of 2006.
A total of £660m worth of equity was released between January and June 2007, compared with £500m in the same period of 2006, according to KRS.
The research also shows drawdown facilities, which allow the consumer to drawdown equity in stages rather than a lump-sum lifetime mortgage, have seen demand grow by 225% in the past year and now account for 44% of all plans taken out.
However, home reversion plans have suffered because of new regulations imposed this year.
Dean Mirfin, business development director at KRS, comments: “Home reversion plans have fallen to just 6% of all plans taken out [from 8% last year], reflecting the regulation of these plans by the FSA from April this year. However, this is not a trend we expect to continue to see, and believe reversion figures will recover slightly in the second half of this year.”
The market monitor also revealed that the average age of an equity release client has fallen from 71 to 70.
Mirfin says greater availability of equity release plans for those aged 55 and upwards, and a large number of people without the favourable pension schemes of past generations, has caused this shift and KRS expect this to continue.
High house price growth in the South East and London has caused this area to see an explosion of equity release business. London saw a total of £91m released in the first half of 2007, up from £44m last year, and the South East saw £165m released, compared with £117m in the first six months of 2006.
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