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Retired homeowners earn almost £77,000 boost from houses

07 November 2018

  • Gifting and improving retirement standard of living drives equity release expansion
  • Plan sales rise by 16% and value released by 25%, Key’s Q3 2018 Equity Release Market Monitor shows
Download the full report at: 
www.keyadvice.co.uk/about/market-monitor
 
Retired homeowners are boosting their finances by an average £76,967 as the equity release market continues to break records, new data from the UK’s leading independent equity release adviser Key reveals.
 
Customers release nearly £5,500 more on average in the three months to 1st October compared with the same period last year (£71,483). The total value of new property wealth released in the three months increased by 25% on the previous year to £933.9 million and plan sales grew by 16% to 12,133.
 
This money released through equity release is typically used for a variety of different expenses.  In Q3 2018, two-thirds (66%) used some or all of the cash to improve their homes or gardens – often ‘age proofing’ them to ensure they are able to stay in their homes.  Over a quarter (27%) gifted some or all of the money to help family or friends and 30% used the proceeds of equity release to repay unsecured debts.
 
All areas of the country saw strong growth in plan sales and value released with Londoners receiving the biggest cash boost at £141,671 but all retired homeowners released substantial new property wealth - the lowest was £50,000 in Northern Ireland (see below for more details).
 
Will Hale, CEO at Key, said: “The market is on course to reach or even pass the £4 billion mark this year given that the last three months of the year is often one of the busiest quarters.
 
“The substantial amounts that customers are able to release highlights how vital property wealth is to retirement planning and the expansion is being driven by customers realising they can address a wide range of financial issues.  Paying for home and garden improvements which often help people to ‘age-proof’ their home remains the most popular use of money with 66% releasing wealth for that purpose.
 
“However, clearing debt is still a major concern for customers – 30% paid off credit cards and loans with the money they released while 21% were clearing outstanding mortgages.  Over a quarter (27%) also chose to gift some or all of the proceeds of equity release to friends and family.
 
“Increased flexibility of equity release plans means older homeowners can use their money in the most appropriate way for them and their families and independent expert advice is key to ensuring they can do so.”
 
Regional Overview:
Key’s Equity Release Market Monitor, which analyses its data reflecting both Equity Release Council members and non-members, found the biggest increase in value released and plans sold was in Scotland. Total value more than doubled and plan sales rose by 50%.
 
Northern Ireland, the North West, the West Midlands and Yorkshire & Humberside all saw strong growth in value released while Northern Ireland, the North East, West Midlands and Yorkshire & Humberside recorded high increased in plan sales.
 
Region Number of plans sold Q3 2018 Number of plans sold Q3 2017 Total value of new equity released Q3 2018 (£ million) Total value of new equity released Q3 2017 (£ million)
South East 2,959 2,827 £260.721 £238.565
London 1,190 1,143 £168.589 £152.498
South West 1,462 1,383 £111.776 £96.652
North West 1,147 900 £71.559 £43.972
East Anglia 949 793 £63.910 £49.016
East Midlands 1,034 870 £62.116 £46.239
West Midlands 898 677 £56.612 £34.911
Yorkshire & Humberside 789 580 £43.976 £26.951
Scotland 700 463 £40.166 £19.920
Wales 490 470 £28.695 £22.215
North East 401 293 £20.032 £14.734
Northern Ireland 113 77 £5.714 £3.230
UK 12,133 10,477 £933.872 £748.908
 
 
Almost two thirds (63%) of all sales were drawdown plans, including 5% in enhanced drawdown which offers enhanced terms to people with health or lifestyle conditions, compared with 37% from lump sum lifetime mortgages including 5% of enhanced plans.
 
Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6027 or visiting https://www.keyadvice.co.uk/equity-release/is-it-right-for-me