More data from CML on lifetime mortgages

01/02/2007

The amount of fresh equity release loans to older home-owners (lifetime mortgages) rose, however the value of lending dropped in 2006, this data was put forward by CML. This alters the size of the average new loan from 45 thousand pounds around 2005 to 41 thousand pounds in 2006.

Many people applied for smaller loans as the year passed by. Towards the end of the year, the new average loan was 38 thousand 400 pounds – These figures are the lowest since CML started investigating 2002 period.

In 2006 new lifetime mortgages lending rounded at 971 million pounds, however last year was 1,048 million pounds. In 2005 new loans rose from 23,215 to 23,786, 2006.

Smaller loans have always been more popular, the complete total value of lifetime mortgages adds up to over 6 billion pounds, towards the end of 2006 at a stunning 6.6 billion and in 2005 this figure was just 5.3 billion.

Looking at different aspects, Jackie Bennet, CML head said:

"The trend towards smaller loan amounts on lifetime mortgages suggests that lenders and intermediaries are being careful to ensure that people are only borrowing what they need. The move towards greater use of flexible features that allow people to draw down money as they need it, rather than all upfront, will also have helped the trend.

"This is all good news for older people looking to release equity from their homes. Specialist advisers on lifetime mortgages are clearly beginning to adopt good practice. The FSA's good practice advice further emphasises the special nature of this market. We expect confidence in the market to grow further, now that the FSA is also regulating home reversion schemes."

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