SHIP results for quarter two of 2006 revealed a rise in the number of new cases, from 5,745 in quarter two 2005, to 6,417 a year later, with drawdown schemes accounting for 1,362 of all new equity release cases in quarter two 2006.
Home reversion schemes also grew strongly and accounted for £13.6 million worth of new business, rising 28.3 per cent from the 2005 findings, while year-on-year, there was a drop in the value of written lifetime business, from £250.3 million, to £249.2 million.
Commenting on the findings, Jon King, chief executive of SHIP, said: “Drawdown mortgages are proving particularly popular and are a welcome development in the industry as it means clients are not burdened with unnecessary debt but are instead taking out a product that is suitable for their immediate needs with a reserve fund available, should they require it, to draw on in the future.”
With a rise in the number of borrowers opting for home reversion plans, brokerage Key Retirement Solutions has expressed its concerns at the rise in council tax. Its study revealed council tax in England rose 96 per cent over the past 10 years, three times faster than the average income of a pensioner couple.
Dean Mirfin, business development director at Key Retirement Solutions, said: “With the state increasingly putting the onus on individuals to make sufficient provision for their retirement, this research really highlights the importance of saving for this goal. The government is unlikely to intervene to reduce this tax and if it continues to increase at approximately 96 per cent every 10 years, pensioners who have not made sufficient provisions are likely to face a bleak future.”
