The twenty members* of UK equity release industry body, SHIP (Safe Home Income Plans), that represent over 90% of the Equity Rerelease sector, today report second quarter figures to 30 June 2006 that show the increasing popularity of drawdown schemes.

Overall business Figures

The total value of new business written in Q2 2006 was £262.8 million, a slight decrease of 5.8% on Q1 2006 (£279.0 million) but slightly (0.75%) ahead of Q2 2005 (£260.9 million). This contributes to an annual rolling year of new cases has risen strongly from 5,745 in Q2 2005 to 6,417 in the latest figures-an increase of 12%.

This is explained primarily by the growing popularity of drawdown mortgages which have a lower average initial loan value than either lump sum mortgages or home reversions. The average amount drawn is £42,000 with lifetime mortgages, £47,000 with a home reversion scheme and £32,000 with a drawdown (as an initial payment). The number of drawdown plans sold is up 11.8% from 1,218 in Q1 2006 to 1,362 in the latest figures.

Year on year, the value of written lifetime mortgage business fell fractionally from £250.3 million to £249.2 million.

In contrast, home reversions continues to grow strongly, accounting for £13.6 million worth of new business, up 28.3% year on year (Q2 2005 £10.6 million).

Jon King, Chief Executive of SHIP said:

“The latest figures show how equity release market continues to evolve. Whilst overall business value figures are flat, the number of cases is still climbing as more and more people consider using equity in their homes to fund retirement lifestyles.

Drawdown mortgages are proving particularly popular and are a welcome development in the industry as it means that clients are not burdened with unnecessary debt but are instead taking out a product that is suitable for their immediate needs with a reserve fund available, should they require it, to draw on in the future.”