Equity Release Loans See Fall In Numbers
2009 saw a reduction in the number of applications across all sectors of the loan market, whether it be a home owner loan, unsecured personal loan or secured loan.
Despite the fact that many retired people who own their own home were struggling financially over the course of last year, the equity release loan market was no exception to the trend of decreasing numbers of loan applications throughout the year. According to the latest figures from equity release experts, Key Retirement Solutions (KRS), the number of new equity release loans decreased by 17 per cent over the course of the year, with the amount of funding released as new loans falling by 14 per cent.
One reason for the reduction in loan numbers is due to the fall in property values, meaning that many individuals will not have the same level of equity remaining in their home, or do not want to use up what equity they do have. KRS also noted that the use of funds raised through an equity release loan has also changed. In 2008 around 11 per cent of all equity release loans were used to repay existing debt on unsecured loans and credit cards, however, last year this figure had increased to 35 per cent, as individuals became more keen to repay their expensive unsecured loan debts.
Dean Mirfin of KRS said “2009 has been a challenging year for all sectors of our industry. The equity release sector has not been immune to the effects of the current economic climate as is evident from the results for the year. The uses of equity release continue to be widespread, however the considerable increase in the use of funds to repay debt is one of the greatest trend changes we have seen. The trend of debt repayment mirrors the trend across all ages in the UK of clearing debt and freeing up more disposable income and no doubt we will see this continue further still in 2010.”
