The Equity Release market should be judged on the number of plans sold, not the lending figures according to Safe Home Income Plans (SHIP), reports Mortgage Solutions (25/8/07).
Jon King, chief executive of SHIP, said people question why Equity Release lending appears not to have grown, but they were being misled by the fact people were increasingly taking out the money they required rather than what was available.
"Drawdown is becoming a major part of Equity Release, matching people's borrowing with what they need. People are taking what they need now. Often people look at the total lending and asks if it's a good year. But it mirrors the fact that drawdown plan numbers have grown strongly; more people are taking out equity release, but taking less money."
SHIP's quarter year results at the end of June 2007 reported drawdown showed the most pronounced growth out of all Equity Release options, representing 47% of all plans sold.
Sixty Plus comment: This very much reflects our experience. It is still commonplace for clients to seek the maximum amount but further discussion reveals an intention to park funds in the bank pending future plans. Drawdown makes far more sense because it can drastically reduce the impact of rolled-up interest.
