Total Advances Reach Two-Year High:
In Q4 2011, total advances of £215.9m were made by SHIP members – this is the highest level since Q4 2009 (£231.7m) and substantially higher than the same time last year (£188.5 – Q4 2010).
In addition, the number of plans sold also increased to 4,399 (Q4 2011) from 4,148 (Q3 2011) – the highest level since Q1 2010 (4,716).
This is excellent news for the market as it shows that despite the continued economic turmoil, people have sufficient faith in the housing market to use their equity to improve their finances.
Drawdown Remains Popular:
However, while people have increased confidence in the housing market, the majority continued to choose plans which allowed them to reserve a proportion of their equity and then access it in smaller tranches.
Indeed, drawdown now accounts for 62% (Q4 2011) of the market followed by lump-sum mortgages (36%) and reversions (2%).
Intermediary Sales Increase:
In Q4 2011, intermediaries sold 90% of all equity release plans (by volume - £193.3m) compared to direct sales of £22.6m (10%).
This is the highest level since SHIP started tracking this data (Q1 2003) and reflects the impact of the gradual reduction in the number of providers with direct sales forces.
Recession Impact still Evident on Year on Year Figures:
While Q4 2011 saw equity release sales revert to more normal levels, the value of plans sold in 2011 (£788.6m) was below that of 2010 (£803.6m).
This reflects the fact that while Q4 2011 was SHIP’s best quarter in two-years, there were fewer providers in 2011 due to market consolidation.
Andrea Rozario, Director General of SHIP said:
“We are delighted to report that not only did total advances reach a two-year high in Q4 2011 but this is the third quarter of growth in equity release sales. This is excellent news and puts the industry on track for a strong 2012.
“This year promises to be a significant one in SHIP’s history as we will be expanding our membership to include intermediaries, solicitors and other interested stakeholders.
"By the end of Q1 2012, we intend to announce the outline of the new body which will work to promote the benefits of these products and ensure consumers receive access to suitable products.”
