Equity Release Increasingly Used To Fund Later Life
Despite economic uncertainty caused by Brexit and a winter election, £3.92 billion of property wealth was withdrawn using equity release products in 2019.
According to the Equity Release Council’s ‘Spring 2020 Equity Release Market Report’, 44,234 customers withdrew £1.81 billion in the final half of last year compared with 41,263 equity release plans in the opening half of 2019.
Equity release products are proving ever popular as a source of financing later life. Since 2018, products have quadrupled from 88 to 300 and have increased by 42 per cent in the past year alone.
Culturally, it seems people are opting to use home equity as a source of supplemental income. According to the research on consumer habits in 2019, 63 per cent of new customers opted to take out drawdown lifetime mortgage products which allows the user the take smaller amounts rather than a single lump sum.
With 25,212 additional products being taken out by people aged over 56 years old since 2015, it seems clear that equity release is being increasingly used as a way of funding later life.
David Burrowes, Chairman of the Equity Release Council comments:
“Hopes that the UK would leave behind the political and economic uncertainty of 2019 have been rapidly overtaken in recent weeks by the national and global response to the coronavirus outbreak. Reflecting on 2019, the equity release market remained robust, as for a second year running older homeowners unlocked nearly £4bn of property wealth. While uncertainty becomes the norm, property wealth will inevitably continue to play a role over the months and years to come, to help meet the wide-ranging needs of the UK’s ageing population. The increasing diversity of firms in the market reflects the wide range of consumer needs which property wealth is helping to address. It is also a sign of the greater frequency with which the option of releasing equity is coming up in retirement planning conversations.
“Equity release is a long-term commitment that can only be made after careful consideration, regulated financial advice and independent legal advice. Strong consumer safeguards will continue to ensure equity release is chosen for the right reasons, with applications vetted prudently and carefully by weighing up both short- and long-term needs.”