Slowdown in equity release mortgage sales
The total number of equity release schemes - or lifetime mortgage loans - sold during the first half of this year was significantly lower than in 2003
11:38 12 August 2004
This is according to the latest figures released by the Council of Mortgage Lenders regarding the sale of lifetime mortgages to the over 50s.
During the first six months of 2004, around 11,200 equity release loans were made, with a total value of around 517 million. This is in comparison with 13,240 loans, worth 597 million, taken out in the second half of 2003.
However, the value of lending remains above the first half of last year, when 11,870 loans worth 504 million were made.
CML director general, Michael Coogan, commented: "All the indications are that lenders and intermediaries are taking a cautious and responsible approach to opening up the equity release market, which is good news from a consumer protection perspective."
He added: "Although consumers should think about all their options before deciding on a lifetime mortgage, these types of loans are extremely valuable for particular types of borrowers who are asset-rich but cash-poor, do not wish to move and understand the financial implications."
The CML feels the slowdown of the last six months is unlikely to be significant and is at least partially a reflection of caution in advance of the new regulatory regime for lifetime mortgages that takes effect from the end of October.
Additionally, it feels that some older home-owners may be choosing to trade down to a smaller property to release equity rather than borrowing, although there is no clear data on this.