It's no surprise that the downturn and falling house prices have led to a drop in the number of people taking out equity release products – but they are still a valuable and useful way for older people to unlock equity in their home.

While over the last three months figures show some signs of renewed optimism, the market volume of equity release schemes sold was down by 22% from the same time last year – 5328, down from 6864 in mid-2008.

The number of new equity release customers did rise by 5% from 5074 in March to 5328 at the end of June 2009 as more consumers turned to equity release to boost their pre and post retirement finances. The number of drawdown mortgages, loans where you can take equity out of your home as and when much like a current account, also increased by 14% over this period. However, while the number of sales increased, the value of products sold over this period fell to £232.9m from £245m.

Andrea Rozario, director general of equity release trade body Safe Homes Income Plans, says: "While the equity release market is still suffering along with the mainstream mortgage market, it is encouraging to see that the equity release market is starting to see evidence of some positive movement. The quarter on quarter increase in the number of plans shows that consumers are once more starting to believe in the UK housing market.

"There remains a clear need for equity release products – especially in the current economic environment. We remain realistic yet positive about the next quarter's results, and expect to see exciting market and product innovations as companies adapt to meet the changing needs of their clients."

Dominic Fraser-Smith, group product manager for UK Life, Aviva, says: "These figures are encouraging and we believe they could herald the first glimmers of a recovery for the UK equity release market."

Fraser-Smith says the increase in drawdown mortgages was particularly encouraging: "The flexibility offered by this product is ideally suited to how many of today's consumers want to access their housing wealth and we expect that its market share will continue to increase in the future."

SOURCE: SHIP, Aviva, 17/07/09

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