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Pensioners Home in on Helping Family

09 April 2010

  • Equity release sales soar by nearly a fifth to £216.9 million, KRS Equity Release Market Report shows

The full report can be viewed at: market-monitor-q1-2010

Retired homeowners are increasingly using equity release to help family as the housing market recovery boosted cash released to £216.9 million in the first quarter of 2010, leading independent equity release adviser Key Retirement Solutions says.

The group's Equity Release Market Report for Q1 2010 shows up to £216.9 million of housing wealth was released through equity release schemes compared with £183.1 million in the same period of 2009 - a rise of 18.46%.

It found money is increasingly being used to help or treat family and friends - 35% of retired homeowners took cash to help family in the three months compared with just 19% in 2009. Helping the family was the second most popular use of the cash released.

Home and garden improvements remain the most popular use of funds released through equity release schemes, with 58% choosing to release cash for those projects which require considerable capital outlay, for example a new kitchen, bathroom or conservatory and for many equity release provides the opportunity to make the garden more manageable.

Total sales of plans climbed 19% to 5,600 in the three months up from 4,703 in 2009 with drawdown plans - which enable customers to take cash when it is needed rather than all at once as a single lump sum - making up 68% of sales compared with 57% last year.

The average amount of cash released in the three months was £43,090 compared with £44,948 in 2009.

Dean Mirfin, Business Development Director at Key Retirement Solutions, said: "The equity release market is healthier and delivering strong returns for retired homeowners as confidence increases which in part has been helped by the gradual property market recovery. Despite falls in property values over the past couple of years many find that they can comfortably raise the amounts they need from the current wealth tied up in their homes.

"It is striking that pensioners are more confident about using their wealth to benefit others rather than having to use the money for themselves. The over-65's property wealth represents a massive investment success as many will have bought their homes more than 20 years ago.

"Helping family and friends was the second most popular use of equity release in the three months just ahead of holidays and behind home and garden improvements."

 
Region Average amount released Q1 2010 Average amount released Q1

2009

South East £43,711 £51,743
London £59,753 £91,845
South West £43,837 £48,531
North West £38,257 £30,572
East Anglia £37,512 £48,461
East Midlands £33,065 £32,675
West Midlands £32,308 £43,464
Scotland £37,007 £28,367
Yorks/Humbs £37,789 £28,538
Wales £37,518 £41,930
North £35,135 £39,396
Northern Ireland £81,187 £53,850
UK £43,090 £44,948

The Market Report shows that equity release still plays an important part in repaying debt amongst pensioners with 23% of over-65s releasing equity during pay off non-mortgage debt while 17% used it to pay off an existing mortgage.

Lifetime mortgages made up 28.3% of sales in 2010 compared with 39.4% in 2009 while reversions remained basically unchanged at 3.7% of total sales.

The full Market Report including regional analysis can be downloaded at Key website www.keyadvice.co.uk/about/market-monitor. Anyone looking to release equity from their home can also request an independent guide to equity release by calling 0800 531 6010 or by visiting www.keyadvice.co.uk/equity-release/request-a-free-guide.

Notes to Editors

* Alldata based on Key Retirement Solutions Market analysis and SHIP market data.

Case studies are available both regionally and also are available dependent on the use of the funds released.