Equity release continues to rise

Equity release continues to rise

For the second consecutive year the equity release market expansion continued, with the average customer taking out an equity release plan in 2012 releasing £52,268, an increase of 7% on 2011’s £49,000.

According to analysis from leading independent equity release adviser Key Retirement Solutions, the total funds released across the market increased 15% to £961.41 million from £832 million.

Drawdown plans enabled customers to benefit from lower borrowing costs, as they can take funds when required rather than in a lump sum, leading to plan sales increasing 6.3% during the year to 19,675.

18% of customers are using some or all of the cash released to pay off mortgages while 22% are using the money to clear credit card debts or loans.

Home and garden improvements remained the most popular use of funds with 57% of people using some or all of their cash for those purposes.

Estate Agent Marsh & Parsons’ latest London Prime Market Monitor showed a rising proportion of homeowners are making use of equity release.

According to their research home buyers upsizing in the prime areas of London accounted for 19.3% of all moves in the last quarter of 2012.

Similarly downsizers are making up 6.6% of the market compared to 4.9% a year ago.

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