Number of equity release sales soar

Aug. 16, 2012 - PRLog -- Recently disclosed by the Equity Release Council, the figures for quarter two of 2012 has unveiled that £224.8million has been released through equity release schemes. In comparison, £184.8million was released through the scheme in 2011 for quarter two, which highlights the development and points to a new growth area for the mortgage industry.

Director of Cooper Associates’ mortgage division, Samantha Cooper, is an expert advisor on equity release and says the figures are as expected. She comments, “There have been significant increases in house prices in previous decades, which has resulted in many individuals over 55 having considerable equity in their property. However, due to falling annuity rates and diminishing returns on interest from saving accounts, many of these individuals have found themselves facing a situation where they are asset rich but income poor.

“Now there are more innovative and competitive products available on the market, in line with the tentative recovery of the mortgage industry, which makes equity release more appealing for consumers. Therefore, more and more individuals are now opting for such schemes in order to support their lifestyle.”

Research conducted among 2,000 UK consumers, of all ages, highlights that today’s workforce anticipate having to rely on equity within their home to support their later life finances.

Cooper continues, “These figures show equity release consumers are now releasing smaller sums over larger periods of time to improve their standard of living and support disappointing pension performances. This marks a distinct change from previous equity release trends, which were most commonly being used to pay for one off purchases. We forecast that as the recession continues, more and more consumers will turn to equity release to support both personal finances and the finances of their family.”

Equity release allows individuals aged 55 and over to release capital tied up in their property without having to make monthly repayments. Using either a Lifetime Mortgage or a Home Reversion Plan, a home owner is able to draw a lump sum from their property or draw an income whilst retaining the right to remain in the home. Key Retirement Solutions, a leading equity release provider, has reported an eight per cent increase from last year in those releasing money to support members of their families as the recession continues to place strain on finances.

Highlighting the changing attitude of the over-55s, the figures from the Equity Release Council show the proportion of transactions completed as draw down plans, releasing smaller regular lump sums, outweighed lump sum mortgages. With the addition of advisers, lawyers and surveyors to the Equity Release Council following its re-launch from Safe Home Income Plans – which equity release was previously known as – more consumer confidence is beginning to emerge in equity release programmes, which bodes well for the further recovery of the mortgage market.

Equity Release may involve a lifetime mortgage or home reversion plan. To understand the features and risks ask for a personalised illustration. Cooper Associates specialise in providing independent mortgage advice and independent insurance advice to both individuals and companies. For more information, please call 01823 273880 or email info@cooperassociatesltd.com.