Equity-release lending hits record levels

Equity-release lending hit record levels in 2014, with nearly £1.4bn advanced to homeowners in what looks to be another sign of growing confidence in the economy.
The total value of equity-release lending reached almost £1.4bn last year, according to the latest figures from the Equity Release Council (ERC).
This is the largest figure since records began in 1992. In year-on-year terms, it also signifies a big rise of 29% on 2013.
More than 5,700 people aged 55-plus released equity from their homes during the last three months of the year – the biggest quarterly figure since the end of 2008. It meant that ERC members had nearly 21,500 customers during 2014 – again, the highest number since 2008.
Nigel Waterson, chairman of the council, said: “Equity release is proving to be a crucial tool for financial planning in retirement, and is allowing retirees to improve their standard of living and give them more flexibility to support themselves or family members.
“Many retirees have more wealth tied up in property than anywhere else, so it is only logical that this forms part of their plan to enjoy a comfortable retirement.”
There are various equity-release (or lifetime-mortgage) plans available, but they all work on the basic principle that homeowners can unlock the money tied up in their bricks and mortar, with the lender being repaid when the homeowners sell their properties or die.
Helen Davies, of Partnership, an equity-release provider, said: “Although the older generation have a considerable amount of housing equity at their disposal, the equity-release market has often been seen as a specialist one.
“However, these figures clearly show that an increasing number of older homeowners consider their homes to be part of their retirement assets.
“With the introduction of the new pension freedoms in April 2015, and more people actively discussing their retirement financing options, we expect to see the market continuing to grow and prosper in the future.”
That is a view shared by Steve Wilkie, of Responsible Equity Release.
“More retirees than ever are using the equity in their homes, not just to supplement their retirement income but to provide lump sums to pay off mortgages and clear debts,” he said.
“Many cash-strapped pensioners have had to rely on savings to boost their pension income. But with low interest rates continuing to hurt elderly savers, equity release is offering a solution to fill that savings hole.”
He added: “Property price rises are certainly a contributory factor, but with retirement planning in the spotlight after the government announced the most radical pension reforms in a generation, equity release has enjoyed an indirect boost.”
The ERC said the average value of each equity-release deal last year was £64,787 – up 14% on 2013.


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