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Liquidity issues restricting equity release: SHIP

by: Mortgage Solutions
  • 15/10/2009
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Safe Home Income Plans (SHIP) has blamed the lack of liquidity in the market and the withdrawal of equity release lenders for the restricted lending activity which has seen the number of new customers fall by 2.5% over the last quarter.

The industry body’s latest market results for Q3 2009 revealed the number of new equity release customers dropped from 5333 to 5198. However, this was still an increase of 2% on Q1 2009 results (5074). The total amount taken via equity release plans rose by 1.2% from £233.3m the previous quarter to £236.2m. 

This quarter showed a 3.9% increase in the average amount released through equity release, rising from £43,746 (Q2 2009) to £45,434 (Q3 2009). SHIP said this was a move that reflected renewed consumer confidence in the stability of house prices.

In comparison to the wider remortgage market – which has seen a decline of 63% this year – the sector has seen a 22% decrease in the value of the equity release market from £303.3m (Q3 2008) to £236.2m (Q3 2009).

However, as the number of customers has fallen by 35%, the average amount released per customer has increased by 19% from £38,189 to £45,434.

Andrea Rozario, director general of SHIP,  it was encouraging to see how well the equity release market was holding up compared to the wider remortgage market.

“The drop in the number of plans sold can be partly attributed to the funding issues that the industry is currently facing.”

“While equity release providers are experiencing high levels of customer demand, a significant impact on the quarter’s business figures has been the lack of liquidity in the overall market which has restricted the lending activity of some providers and resulted in the withdrawal from the market of some others.”

Following on from the launch of its discussion paper this summer, Rozario repeated SHIP’s calls to the Government to launch a review of equity release, and explore how it could take its appropriate place in the retirement planning sphere. 

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