Third quarter figures for the nineteen members of SHIP are seen to demonstrate a clear resilience to the recent credit crunch felt by the mainstream mortgage market.
The total number of new equity release plans sold in Q3 2007 increased 15 per cent, year on year, from 6,954 – Q3 2006 to 7,981 – Q3 2007.
The total value of new business written reached £325.3 million, the highest quarterly figure since 2005, and contributed to an annual rolling year total figure of £1,238.9 million at the end of Q3 2007.
Home reversion schemes saw the beginnings of their predicted growth this quarter. Since these schemes were regulated by the FSA in April this year the amount of new business written for home reversions in Q3 2007 increased 20 per cent year on year, from £18.2 million to £21.9 million – Q3 2007.
Drawdown mortgage options also showed no signs of slowing. These plans now account for 51 per cent of all new equity release plans sold compared to just 26 per cent in Q3 2006 .
Jon King, chief executive of SHIP, commented: “This quarter’s figures demonstrate the continuing growth of the equity release market and its resilience to the present economic climate. Unlike mainstream mortgage lending equity release has the ability to ride out market turbulence and is set to increase in size by the end of the year. Consumer confidence in equity release is also protected with SHIP member products ensuring a ‘No Negative Equity Guarantee’.
“The growth in home reversion business is encouraging and is testament to the industry’s persistence in calling for full regulation of the market. As these products become recognized as viable options for a population where life expectancy continues to increase the popularity in these products is expected to grow."
Dominic Fraser-Smith, group product manager at Norwich Union Post Retirement Products, said: "We are delighted to see these excellent new figures for SHIP which show that sales are up 15 per cent up on the same quarter last year – a very positive sign of a healthy growing market.
“Following the full regulation of the equity release market, we have seen an increase in the number of reversion plans sold which is good news for the sector. The fact that consumers can now consider the entire universe of equity release products when looking for their ideal plan will help to ensure that people find the right solution for their circumstances.
“Despite some worries that recent negative coverage of unregulated and – indeed – unrelated products called ‘sale and rentback schemes’ might dampen the appetite for equity release, we are confident that the sector will perform well in Q4.
"Traditionally, the last three months of the year have been a good period for these products and we belive that this will happen in 2007.”
