SHIP, the trade body for equity release providers, which represents the majority of the equity release sector, today announces the market figures for the second quarter of 2011.

Total advances of £184.9m were made by SHIP members in Q2.  This represented an increase of 2% on total advances made in Q1 2011 (£181.6m).  This increase is likely  due to the raft of new impaired health products which allow a greater amount to be released for those customers in ill health. The popularity of these new products has led to  the value of the market increasing but, the number of customers falling by 3% to 3710 (Q1 2011 – 3838).

While the number of equity release customers fell over the last quarter, the number of advances made through independent financial advisers (IFAs) increased by 3%, accounting for 88% of all advances made – the highest proportion on record.  This was an increase on intermediary market share from 85% (Q1 2011)

The average amount released was £49,830, 5% higher than Q1 2011 (£47,323), and the highest average amount since Q1 2009.   While the average amount released has increased due to the impaired health products, there is also a substantial amount of reserved but undrawn facilities which will have a positive impact on the market in the future. The popularity of the flexible drawdown mortgage has impacted on the industry figures over the last few years, a testament to the fact that the good practice of ensuring the client does not take more money than they need at the time is being followed.

Drawdown mortgages remained the most popular product, representing 61% of all advances (Q1 2011: 60%) and increasing in value from £108.2m to £113.2m over the past quarter.  This was followed by lump sum mortgages representing 37% of advances and reversions forming 1% of advances.  Year on year total advances have fallen 6% (Q2 2010: £196.7) and customer numbers by 14% (Q2 2010: 4303).

Andrea Rozario, Director General of SHIP said:

“The value of the equity release market has increased since the first quarter, despite a fall in the number of customers taking the products out.  This suggests that many of those who are using equity release are drawing higher amounts than before –  due in part to the use of enhanced products and increased confidence in the housing market.

“In addition, SHIP members also state that there are significant amounts of reserved but undrawn facilities which will come into play in the future.  

“The Dilnot Commission recently highlighted the role that a person’s home might play in funding long term care and so this provides yet another opportunity for the equity release market to grow in the future.  The launch of new innovative products over recent months is an encouraging sign that the market is developing in line with customers’ needs.