Equity Release Rates Rise

More than half – 57% – of homeowners have expressed an interest in releasing equity from their property in later life.

Broken down by age, this statistic increases to 74% for homeowners aged 30 to 39 while 47% of homeowners in the 60 to 69 years old age bracket are interested in accessing money from the value of their homes.

These insights come from the Equity Release Council’s (ERC) latest report ‘Home advantage – Intergeneration perspectives on property wealth in later life’, released today.

In it, the ERC notes 10 “far-reaching” trends that it says have made equity release a more flexible and trusted part of economic behaviour in later life.

These are as follows:

• Decreasing workplace security lowering access to decent pensions

• The low interest rate environment depressing retirement income

• The eradication of defined benefit pension schemes

• Unsure long-term effects of the pension freedoms introduced in 2015

• A belief that the state pension age will be set at 68 years old by 2040 (and 46% of people in their 30s not believing they will ever be able to access it)

• The heightened reliance on ‘the bank of mum and dad’ for first-time buyers. (On this point, the FCA worked out that 62% of homeowners under 35-year-old relied on this or gifts from friends to buy their first house).

• Easing of regulation regarding borrowing in retirement

• The era of record low mortgage rates

• The existence of longer and longer mortgage terms

• Greater acceptance towards carrying mortgage debt in later life

• The report details that across all homeowners, the most popular reason for taking an interest in equity release is to boost pension income and savings, followed by paying for care support at home.

Of note, Moneyfacts’ analysis of equity release product numbers revealed a 45% rise in deals from 480 in January to 698 in August.

Product numbers have risen drastically over the last five years, by almost 700%.