This was one of the findings of the 2008 UK Equity Release Market Monitor released by from Key Retirement Solutions. It found the number of Drawdown plans taken out increased by 9% in 2008 and now accounts for 60% of all plans taken out.
The demand for standard Lifetime Mortgages showed a decline from 43% to 36% year on year, while Home Reversion plans showed a slight decrease, dropping to just 4% of all plans in 2008 from 6% in 2007.
Commenting, KRS group director Dean Mirfin said: "Throughout 2009 it is important that those considering equity release do not get caught out by reductions in their property values. Drawdown plans enable you to lock in a facility which then remains unaffected by fluctuations in property values, and anyone considering equity release should start looking into theses plans. For this reason we would expect to see demand for Drawdown plans increase further still through the coming year."
The market monitor shows that the number of equity release plans taken out by retirees decreased by 14% from 2007 to 2008, with the total amount of equity released in 2008 reaching just over £1.18 billion, a 14% decrease in comparison to 2007 (£1.39 billion). It also found that during the last quarter of 2008 the number of plans taken out was down 8% on the same period in 2007. The average amount released was £47,341, a 10% decrease on the fourth quarter of 2007.
Mirfin said: "Whilst 2008 for the mainstream mortgage market saw a considerable and ongoing decline in the levels of new mortgage business, by comparison the equity release market has had a more resilient year. The past year proved tough for all financial service sectors, however the results for the equity release market show that demand is still strong despite a year of house price deflation and understandably issues of confidence amongst consumers. The industry is well placed as we enter 2009 with a healthier level of enquiries compared to the same point in 2008.
"Although the results for the industry are down as a whole, we are pleased to report that Key Retirement Solutions' figures for the year bucked the market trend. As a result, Key now arranges one in four of all equity release plans in the UK."
