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Value of lifetime mortgages slips but reversions perform strongly says SHIP

The value of lifetime mortgages slips but reversions perform strongly in a softening property market according to Safe Home Income Plans.

In its third quarter figures to September 30 2005 a significant increase in home reversions business is evident. SHIP believes this reflects the fact that property price inflation is far lower now than in recent years, which is making reversion products more attractive.

The total value of new business written was 293.6m, 12.5 per cent ahead of the second quarter in 2005 of 260.9m. Home reversions business increased from 10.6m in Q2 2005 to 17.3m in the latest figures.

Year on year home reversions have risen from 9.6m in Q3 2004- a rise of 80 per cent.

But despite an increase on Q2 2005 business, figures show a considerable drop in the value of lifetime mortgages business written from 328.8m in Q3 2004 to 276.3m.

Ship chairman Jon King says: “Lifetime mortgages business has begun to slip back, despite it being a record quarter in 2005. However, home reversions have performed strongly this quarter. This reflects continued uncertainty in the property market and speculation that house price inflation is not likely to be as great in the future as it has been in the past. This may see increasing numbers of consumers turning to home reversions in preference to lifetime mortgages as the proportion of the house sold is fixed.


Opening up the home reversion market

Key Retirement Solutions business development director Dean Mirfin says advisers have a duty to consider home reversions as well as lifetime mortgages for equity-release clients

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