Continuing a downtrend
which began in the fourth quarter of 2007, activity in the UK’s
equity release market fell further in the opening months of 2010,
data from industry body Safe Home Income Plans (SHIP)
revealed.
SHIP reported advances in the first
quarter of 2010 totaled £213.4m ($330m), down 12.9% compared with
both the same quarter of 2009 and down 7.9% compared with the
fourth quarter of 2009.
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Advances of £946m in 2009 as a
whole were down 13.6% compared with almost £1.1bn 2008.
SHIP director general Andrea
Rozario downplayed the decline in the first quarter of 2010, saying
the withdrawal of some big providers played a role.
Rozario was referring to
Prudential, in particular, one of the biggest players in the
market, which ceased writing new business in the first quarter of
2010.
SHIP’s data for the first quarter
of 2010 included an estimate of Prudential’s advances based on the
last quarter of 2009.
Commenting on the SHIP data, Aviva
group product manager, post retirement, Dominic Fraser-Smith said
the insurer believed the “slight fall” in market size was “purely
due” to providers dropping out of the market as opposed to a fall
in demand for equity release products.
She continued: “We also believe the
ageing UK population and ongoing shortfall in pension provision
will undoubtedly lead to equity release becoming a mainstream
retirement funding vehicle in the future as demand for these
products continues to increase.
Echoing SHIP’s view Fraser-Smith said Aviva believe a recovery
in the equity release market would be seen in 2010 and that there
was a possibility of some new entrants joining the market.
