Whilst the number of plans fell by 7% the effect of falling property prices has impacted heavily on the overall lending figures. The monitor reports that the combination of a 7% drop in plan numbers and a 16% drop in property prices has resulted in a fall in lending for the sector of almost 24%.This is the largest fall Key has recorded since it began monitoring the sector in 1998. Total lending has fallen from £240 million to £183 million. As a direct result the average loan amount has fallen by 15.33% to £44,948 (2008 Q1 - £53,084).
The average property price in all regions of the UK has fallen dramatically with falls a high as 26% in East Anglia, 24% in Scotland and 20% in the East Midlands. London fared best with a 6% fall. With such dramatic property value changes the equity release market could not be unaffected.
Commenting, Dean Mirfin, KRS group director, said: “Whilst the total number of plans fell by just over 7% the dramatic fall in lending figures is impacted most by the fall in property values. The average property value for someone taking out equity release has fallen by over £36,000.
“The results for the first quarter of 2009 show that despite falling property prices the demand to release equity is still strongly evident. Those considering equity release may be waiting for property prices to improve, but this could well prove to be a false economy. We only get one chance at retirement and it is important that those considering equity release do not delay, time is something we can’t buy back.”