Equity release continues to be a major way of providing retirement income, according to research published by Key Retirement Solution, one of the UK’s leading equity release specialists.
It wasn’t all plain sailing in 2019 as the sector suffered some of the effects of political and economic instability resulting in a 4% drop in total equity released from £3.6billion in 2018 to £3.4 billion in 2019.
However, there are now over 300 equity release products on the market and 2019 ended on a high as Q4 saw the largest amount of equity released over the year (£921 million) – a 4% increase on Q3 (£887 million). The number of homeowners accessing equity also rose marginally to 11,820 (Q4) from 11,722 (Q3) – as consumer confidence started to improve.
Top uses for equity release
64% – home and/or garden improvements
32% – go on holiday
29% – pay debts (loans or credit cards)
28% – gifting to family and friends
20% – clearing mortgage
12% – help with regular bills
Buoyed by house prices, the South East and London are the regions with the highest value of equity released in 2019. Northern Ireland recorded the biggest jump in value, up 17% in the year but overall volumes are still low compared to other regions across the UK. The South West recorded the biggest drop in the number of plans executed in the year, down 14% on 2018’s numbers.
Other interesting stats
The average age of someone releasing equity is 72 with the oldest customers in their nineties. The challenge for clients and advisers in this market can be the level of debt held by potential equity release clients. Key’s recent “Retirement Class of 2020” research, found that one in three people planning to retire in 2020 held average debts of £17,460. This is split across credit cards (48%), personal loans (31%) and mortgages (14%). Worryingly, 8% of those in debt owe over £20,000 and 4% do not know how much they actually owe.
Equity release is one option for helping people enjoy their retirement but holistic financial planning can take a wider view of everyone’s circumstances and identify the most appropriate means of funding for retirement.
Note: Wren Sterling is an introducer to Key Retirement Solutions for equity release and lifetime mortgages.
Important: Equity release will reduce the value of your estate and may affect your entitlement to means tested benefits.