Over 25,000 lifetime mortgages, worth over £1 billion, were advanced in 2003. This compares with 16,300 mortgages, worth £655 million, in 2002. Growth in the market has been strong over the past two years. New business in the second half of last year was almost triple the value of lending in the first half of 2002.
At the end of the second half of 2003 there were an estimated 69,000 lifetime mortgages outstanding worth £2.85 billion. Nearly all the equity release mortgages outstanding, as well as nearly all new business, were on a rolled-up interest basis * where the borrower is not required to make payments until the property is sold.
The average loan taken out in the second half of 2003 was £44,000, and the typical minimum age for borrowers was 60.
Jackie Bennett, CML Senior Policy Adviser, commented:
"Lifetime mortgages represent just a third of one per cent of the total mortgage market, although business is growing rapidly. We see lifetime mortgages as a growth area, as older home-owners increasingly tap into their housing equity to fund a more financially secure old age.
"Against this backdrop we welcome the fact that lifetime mortgages will be regulated under the new FSA rules that take effect from 31 October. We believe that home reversion schemes * the main alternative to lifetime mortgages * should also be regulated, to ensure that elderly home-owners receive an appropriate level of protection across the board."
