In Q3, the value of the equity release market increased by 4% from £196.7m (Q2 2010) to £205m (Q3 2010) - the largest quarter on quarter increase since mid-2008. In addition, to the increase in value of the market, the average release also increased by more than £1,000 up from £45,702 (Q2 2010) to £46,754 (Q3 2010).
Drawdown mortgage sales have climbed marginally and now account for 57% of the entire equity release market (Q2 2010 - 56%). While sales of this type of product and those of reversions have increased, the sales of lump sum products - which account for 41% of the market - have fallen marginally (Q2 2010 - 42%).
This is a significant change from the picture two years ago when lump sum products accounted for 56% (Q3 2008) of the value of sales. SHIP believes this change may in part be due to the fact that some consumers are reluctant to take out significant one-off amounts of housing equity when the continued growth of the residential property market is uncertain.
Over the period, intermediaries sold 82% of all equity release products (+1% on Q2 2010) and direct sales forces sold 18% (-1% on Q2 2010). This is a slight quarter on quarter change and reflects the increasingly important role intermediaries have in the market.
Commenting, Andrea Rozario, director general of SHIP said: "We are delighted to see that the equity release market has returned to growth with the largest quarter on quarter increase since mid-2008.
“The financial services industry has had a tough couple of years and this move clearly illustrates increased customer demand. It also shows that the work undertaken by SHIP - and its members - to increase the wider acceptance of this product range is having an impact.
"It is interesting to note the swing from lump sum mortgages being the most popular product to drawdown dominating the market. This reflects the change in the type and number of providers as well as consumers attitudes to borrowing. With the current economic turmoil and resulting consumer uncertainty, many consumers favour drawdown mortgages which allow them to gradually access the equity in their homes. The sales of reversion mortgages have also increased.
"This quarter's figures provide us with a strong platform for growth in the remainder of 2010 and a firm foundation on which to expand the market in 2011. In addition, the cuts announced in the recent spending review will hit all sectors of the population and may lead to more people seriously considering equity release."
