In its Q2 2009 survey, Key Retirement Solutions found that the number of new plans was down 24 per cent, from 6,747 in Q2 2008 to 5,143. But the overall value of new lending fell 41 per cent to £189m, from £319m in 2008.
KRS says this fall is due to smaller average loan sizes, reflecting loan to value against reduced property prices and the level of lower initial releases from drawdown plans.
It also found that the average age of an equity release borrower fell from 68 to 67 years old over the year. Also, an increasing amount of borrowers used equity release as a means of debt management, up to 29 per cent of from 19 per cent in Q2 2008.
KRS group director Dean Mirfin says the decline in lending values means there is an increase in the uptake of drawdown plans where customers can release a lower amount initially and then return for further funds when needed.
He says: “The result for this quarter over the last are encouraging and we believe that the demand for equity release will continue, and following this turbulent period will return to, and then exceed, previous business levels.”