An astonishing 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. Meanwhile 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 comes from the Equity Release Council’s (ERC) latest report ‘Home advantage – Intergeneration perspectives on property wealth in later life’.
What are the top reasons as to why homeowners choose to release equity?
Within the ERC report it notes that there is 10 “far-reaching” trends that 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. As well as 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
- 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. This is followed by paying for care support at home. Boosting pension income and savings is the most popular reason with homeowners in their 30s. In second place behind this reason is the intention to give money to a family member for use as a house deposit. Homeowners in their 60s are also most interested in reinforcing their pensions and savings and paying for holidays.
The current mortgage market
The ERC’s report states that being a homeowner could save someone on average of over £300k across 30 years! This is a significant saving and is only one of the reasons that so many people aspire to owning their own home.
Speaking with Mortgage Director Jack Miller, he says “Getting onto the property ladder can be one of the more challenging financial goals that people face, particularly in a climate of double-digit house price growth”. With the increase in house prices, it’s perhaps no wonder that we are seeing a growing number of enquiries about how people can use their own property wealth to help loved ones secure their first home. On that note, if you’re looking to release equity from your property then get in touch with our team. Find out how we can help you by contacting us on 01634 968111 or book an appointment online.
