Pensioner property wealth drives car sales
08 February 2016
- More than 1 in 5 releasing equity purchase a car
- Average equity release customer buying a car spends £14,000
- Pensioners in London on average spend £21,742
Pensioners are increasingly using their homes to fund a car purchase with the average retired homeowner spending £14,000 on a car, analysis from leading over 55s retirement specialist Key Retirement (1) shows.
More than one in five customers using equity release plans purchased a car highlighting how confidence in property wealth is helping to boost retirement lifestyles.
The average £14,000 being released is enough to pay for at least the basic model of four of the top 10 selling new cars in the UK(2) - the Mini, Volkswagen Polo, Vauxhall Corsa and Ford Fiesta.
Retired homeowners in London spend an average £21,742 on cars with their property wealth enabling them to afford almost any of the top 10 selling cars, Key's analysis shows. They are just short of affording the Nissan Qashqai at £21,980.
Key believes pensioners are increasingly using equity release to pay for new cars partly due to rising house prices and increased flexibility making property wealth a better bet but also because access to finance for older borrowers is becoming increasingly difficult. Retaining mobility and having a reliable vehicle are also clearly important factors amongst those releasing equity from their homes.
Dean Mirfin, technical director at Key (www.keyadvice.co.uk), said:
"Property wealth is making a massive contribution to helping pensioners to buy new and used cars. It is partly down to increasing confidence and the growth in the average amounts being released through equity release.
"But there is evidence that some of it is fuelled by the tightening of borrowing criteria for older customers who are finding they can no longer secure credit or afford the terms available to them through traditional borrowing methods.
"Historically, pensioners could purchase cars on finance deals; however stricter lending rules mean they are less likely to qualify for the best, if any deals."
The table below shows the average amount released per region for cars:
|Area||Average amount spent on car|
|Yorkshire And The Humber||£11,931|
TOP 10 SELLING UK CARS FOR 2015
|CAR||BASIC MODEL PRICE|
Anyone looking to release equity from their home can get Key's independent guide to equity release by calling 0800 531 6027 or visiting www.keyadvice.co.uk/equity-release/request-a-free-guide