Sharp drop in equity release

Sharp drop in equity release

Monday, July 11, 2005

The amount of money people have unlocked from the increase in their property values has sharply dropped over the last quarter, according to Bank of England figures.

At £6.42 billion for the first three months of 2005, UK mortgage equity release stood at its lowest value for nearly four years. The figure for the same quarter of 2004 was £15.93 billion and was £8.28 billion in the last quarter of 2004.

£mn (SA)
2004 Q1	2004 Q2	2004 Q3	2004 Q4	2005 Q1
15,925	14,402	12,370	8,280	6,419

Until recently mortgage equity withdrawal has been very attractive to people wanting to take advantage of low interest rates and increasing property prices to unlock some capital from their home to invest in improvements or finance a holiday home. The fall in MEW is part of a wider picture of a slowing housing market.

The Bank of England monitors MEW in order to measure that part of secured borrowing that is not invested in the housing market.

To work out the figures it takes the increase in housing finance (net mortgage lending and capital grants) and subtracts households’ investment in housing (purchases of new houses and houses from other sectors, improvements to property, and the transactions costs of moving house).

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