Equity release mortgages break £5bn barrier
The value of equity release plans grew by 4.2 per cent from £286 million in quarter two 2005 to £297 million in quarter three. The growth in the three-month period brought the value of plans being sold in 2005 to £818 million which put the industry on track to exceed £1 billion worth of new business by the year end for the second year running.
The value of equity release plans introduced via intermediaries rose marginally to 64.65 per cent in quarter three from 63.77 per cent in quarter two.
KRS suggested the growth isn’t as high as expected, supporting the view that many intermediaries are still not confident advising in the market and remain cautious in light of industry developments such as the recent FSA mystery shopping exercise looking into the sector.
Dean Mirfin, business development director at KRS, said: “Breaking the £5 billion barrier highlights the increasing popularity of equity release as a retirement funding option. Lifetime mortgages continue to dominate the equity release market.
“ However, reversion plans are becoming more attractive and some providers are reviewing the structure of their offerings or even, in the case of Norwich Union, launching new products.”
Mark Howell, head of marketing at Bristol & West, said it has just launched an improved range of lifetime mortgage products. He said: “Predictions are that the market will grow significantly over the next few years as people seek to utilise the equity in their property to fund their retirement plans. Our range of products is competing in the capital release sector which currently represents about two-thirds of this market.”