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Equity release market experiences best year since 2009

The equity release market has experienced its most successful year in three years in 2012 both in terms of volume and value of sales, according to the Equity Release Council.

The total value of the market increased by 17 per cent to £925.7m in 2012, up from £788.6m in 2011.

At £52,191, the average value of equity release plans was higher than in any year since 1998, which the trade body suggests is mainly down to people carrying mortgage and credit card debt into retirement to address outstanding balances on products like interest-only mortgages.

In total, there was a 10 per cent annual growth in the number of plans sold in 2012, with sales via intermediaries accounting for 91 per cent of the market in terms of value and 88 per cent in terms of volume. This was the largest intermediary market share since 2003.

Drawdown mortgages grew by 13 per cent in terms of volume – 12,500 plans – and 27 per cent by value – £610m – in 2012, up from 11,000 plans and £480.1m in value in 2011.

Lump sum mortgages grew by 5 per cent in volume – from 4,800 in 2011 to 5,000 plans in 2012 – and 7 per cent in value – £291m to £300m in 2012. They currently make up 33 per cent of the total market compared with 49 per cent in 2009.

ERC director general Andrea Rozario says: “These figures are a great conclusion to what has been a landmark year for the Equity Release Council, having relaunched with a new identity and extended the reach of our membership to include more representatives and interest groups from across the market.

“The ongoing debate over issues like later life finances and the cost of elderly care has already grabbed the attention in 2013. But the growth of the equity release market over the last twelve months is a really positive sign that people are making proactive moves to get the best use out of their housing equity.”

See below for a table of the market share of drawdown mortgage products and lump sum mortgages products:

Equity release figures

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  1. Encouraging figures and clear evidence that the equity release sector is not only in a rude state of health, but also that clients and advisers are prudently accessing housing wealth by turning to drawdown plans in greater number. Simon Chalk, Technical Manager – Equity Release, Age Partnership

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