Equity release used by older homeowners to boost pensions

Journalist: Sarah O'Grady, The Daily Express

ended 02. August 2022

I'm looking for jargon-free succinct quotes on today's record-breaking equity release figures out from the Equity Release Councils showing older homeowners plumbing their property wealth to the tune of £1.6bn in Q2 2022.  Average sum being £135,000.

With inflation also a record-high pushing up the cost of living, and with soaring energy bills on the horizon,  many retired older homeowners on a fixed income want a financial buffer in the bank as they age.

 

8 responses from the Newspage community

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It’s not a surprise equity release lending has hit new highs. House prices are at an all time record and the cost of living squeeze is hitting people hard. It’s particularly hitting retirees who have limited income, and limited income opportunities with higher proportions of their income going on bills that have gone up a lot, like energy. Equity release has also got a good reputation now. It’s a great product for the right customer. Older people's views are changing, too. Many don’t see that a huge inheritance for their children is a right, and they are starting to prioritise their own wellbeing.
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The long anticipated arrival of Equity Release as a mainstream lending product for over-55s to raise funds from their home has arrived. Financial need has combined with economic desire for using property wealth to improve pensioners and their families' lifestyles. Doubts and fear over older Equity Release products have been replaced by knowledge and confidence in modern, regulated products. 2022 will become known as the year that the financial crisis encouraged the older generation to use all of their assets to plan their future., with property being a prime option.
Decades of financial unpreparedness for many have left them with scant pensions. This, coupled with incomprehensible energy cost rises, is the driving force. So many people fall into the trap of thinking they're wealthy because the bricks and mortar around them keeps rising in value. With a shortage of bungalows, downsizing is a thing of the past. The only option available to many is the equity tied up in their properties. This problem has been building for years, and a sharp uptake of equity release is now about to form the next cyclical crisis. All those children expecting and relying upon bumper inheritances will suddenly find the cupboard bare. Our addiction to housing is quickly becoming a severe sickness.
Equity Release is a quickly growing prospect. We are seeing more and more people using this to boost their pension income and to help bolster their income with the increasing cost of living. It is rapidly becoming a staple in the financial services industry.
Equity release is coming of age, there are more providers and growing consumer understanding of the topic. The stigma around this heavily regulated product is reducing and borrowers are cashing in their bricks and mortar for a host of reasons. It still forms a very small percentage of home finance, but it is likely to continue to grow.
Equity release is fast becoming a financial planning tool when it comes to funding a more comfortable retirement. With the modern changes to lifetime mortgages such as no negative equity guarantee, and the ability to make overpayments to slow or even stop the compound interest, this is no longer a product of last resort but a viable solution to meet older homeowners' needs.
Later life mortgages have provided the flexibility older generations deserve in order to plan their futures effectively. No longer must the retired suffer a cash poor, asset rich lifestyle. Now, they can have the freedom to remain in their own property, yet access the wealth previously trapped within it. The financial services market continues to create and nurture products that the people need, to solve problems which they don't.
We have seen a huge increase in demand for Lifetime Mortgages recently. Some older homeowners have hundreds of thousands, if not millions, of pounds tied up in the value of their homes and they want to benefit from this during their lifetimes rather than leave it all to their children after they are gone.