Equity release sales rise over a fifth

Equity release sales jumped 22% in the first half of 2010 to £454.99m compared to same period last year, according to Key Retirement Solutions (KRS).

It says the rise was driven by increased pressure on pensioner incomes and renewed confidence in house prices.

The average age of people starting equity release also increased to 69 for the first half of this year from 67 during H1 last year. KRS says this reflected the need for retired homeowners to increase their income as they struggle on their existing pensions.

In addition, growing confidence and increased levels of activity in the equity release market have encouraged more lenders to consider the sector.

Total sales of equity release plans climbed 5% to an estimated 10,318 in H1 2010 up from 9,852 in 2009.

Drawdown plans, which enable customers to take cash as required rather than in a lump sum, made up 72% of sales compared with 61% last year.

Meanwhile, the average amount of cash released in H1 2010 was £42,555 compared to £42,586 in the same period in 2009.

Dean Mirfin, group director at KRS, says: "Housing wealth is an important source of income for pensioners and certain to become even more important as pension income continues to be squeezed.

"New business growth rates demonstrate that customers are recognising their housing wealth can be put to good use."

He adds strong sales performance and firms re-entering the market showed the sector was moving in a positive direction, with new products highlighting there is room for innovation.