Retired homeowners are behind the growing popularity of equity release, with more people opting to access the cash tied up in their bricks and mortar.
Figures published by industry umbrella group the Equity Release Council (ERC) show an annual increase of 2% in the number of people taking out the products during the first half of this year, but a 5% increase in the 65-74 age range.
This age group was responsible for nearly 60% of all policies taken out during this period, while a quarter were taken out by people aged between 75 and 84.
“The retirement landscape has changed considerably in the last year alone, but it remains a challenge for many people to save enough to support the lifestyle they aspire to,” says ERC chairman Nigel Waterson.
“Appetite for using housing wealth as a source of funding in later life continues to grow, and equity release is playing an increasing role in helping people – especially those who are asset-rich and cash-poor – enjoy a better quality of life beyond the age of 55.”
Richard Eagling, head of pensions at Moneyfacts.co.uk, says: “The fact that equity release lending has enjoyed its best first half of a year since the ERC started tracking half-yearly returns in 2002 highlights the growing appetite among elderly homeowners for unlocking their property wealth.
“Rising house prices and a growing appreciation of the safeguards inherent in modern equity-release offerings have improved confidence in the sector, while the lower lifetime-mortgage interest rates that we are currently seeing have made it a more attractive option.
“Our own research shows that the average interest rate charged on a fixed-rate lifetime mortgage currently stands at just 6.11%, down from 6.31% a year ago, and significantly lower than the rate of 7.12% recorded five years ago.
“These low equity-release interest rates look even better value for money when viewed against the much higher interest rates charged on some of the more traditional forms of borrowing.”