|
Equity release demand hit by crunch
17 April 2008 12:48
Demand for equity release plans has decreased in the wake of the credit crunch, according to new figures, although the sums being drawn from homes are still rising.
Take-up of these plans fell by 16.5 per cent year-on-year to 6,009 during the first quarter, Key retirement Solution's index showed, although the average amount of equity released climbed by 10.9 per cent to £53,084 during this time.
Drawdown plans dominate the sector, accounting for 62 per cent of all plans taken out during the quarter, while home reversion products accounted for five per cent and the share held by lifetime mortgages dipped to 33 per cent from 54 per cent a year before.
Meanwhile, although the main reasons for releasing equity were to fund home improvements and holidays, one in three used it to pay off existing debts, one in six to clear their outstanding mortgages and one in seven to meet day-to-day expenses.
Key retirement Solutions' Dean Mirfin attributed falling demand for these plans to the credit crunch, but noted that there have been no huge rises in rates or mass withdrawals of products and predicted that take-up would improve in the second quarter of the year.
|
