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Two out of three invest in home with equity release

04 February 2015


  • However clearing credit cards and loans is an issue for 30% of customers and one in five pay off mortgages, Key Retirement Equity Release Market Monitor shows

  • Average age of new customer climbs to 71

  •  
Download the full report at: www.keyadvice.co.uk/about/market-monitor

Equity release customers are increasingly using property wealth to fund home and garden improvements as record sales highlight the importance of utilising all available assets in retirement planning, analysis by leading specialist over-55s provider Key Retirement shows.

Its 2014 Equity Release Market Monitor shows 63% of customers - compared with 58% in 2013 -  used some or all of the money they released to fund home and garden improvements underlining how property wealth is enhancing retirement lifestyles.

But credit card and loan debts as well as mortgages remain a major issue - 30% of customers used cash to get out of the red while 22% paid off mortgages, Key's study shows.

Key's Market Monitor builds on the Equity Release Council's figures which showed an all-time high of £1.38 billion property wealth was released in 2014 as record numbers of homeowners took out plans.

The Market Monitor shows the average age of equity release customers rose to 71 in 2014, from 69 previously, with customers' average property value increasing to nearly £260,000 from £238,000 previously. That helped drive a 15% rise in the average amount of property wealth released by UK equity release customers to nearly £64,800.

Across the country 11 out of 12 regions saw growth in the average amount of property wealth released with Londoners taking the most at £127,412 - around 19% higher than the average £107,224 released the previous year. Homeowners in Yorkshire & Humberside released the lowest amount on average at £44,647.

The number of plans sold rose in nine out of 12 regions with Northern Ireland recording a 70% increase and Yorkshire & Humberside recording a rise of 18%.

Dean Mirfin, group director at Key (www.keyadvice.co.uk), said:  "Equity release makes a major contribution to retirement planning with average customers releasing nearly £65,000 of their property wealth.

"Attitudes are shifting as pensioners recognise their property investment, if used wisely, can change their lifestyle. The launch of pension flexibility will accelerate that process with all the evidence showing people are spending their money sensibly.

"Debt in retirement however is a major issue with large numbers of customers using money to clear mortgages as well as credit card debt and loans. That highlights a real need for lenders - including equity release providers - to develop solutions to help."


 
Region Number of plans sold 2014 Number of plans sold 2013 Average value released  2014   Average value released 2013  
South East 4,700 4,419 £74,257 £67,729
London 2,077 1,879 £127,412 £107,224
South West 2,668 2,482 £67,598 £63,663
North West 2,186 2,181 £47,561 £49,714
East Anglia 1,209 1,139 £57,798 £54,832
East Midlands 1,643 1,776 £49,541 £47,827
West Midlands 1,672 1,551 £52,821 £50,110
Scotland 1,530 1,571 £47,283 £46,655
Yorks & H'side 1,778 1,508 £44,647 £45,070
Wales 794 908 £51,122 £53,509
North 762 724 £49,360 £45,895
Northern Ireland 331 194 £45,010 £40,308
UK 21,350 20,331 £64,748 £56,045

Around 66% of all sales were drawdown plans, including enhanced drawdown which offers better rates to people with health or lifestyle conditions, compared with 34% from lifetime mortgages including enhanced products. The market share of enhanced plans rose to 13% from 8% previously underlining the focus on innovation in the market.

Key's analysis shows the average initial amount released on drawdown plans - which reduce interest costs for customers - fell in 2014 to £35,544 from just over £38,000 the previous year.

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

TOTAL VALUE OF EQUITY RELEASED ACROSS THE COUNTRY



 
REGION          2014 (£ million) 2013 (£ million)
South East £349.023 £259.516
London £264.610 £174.744
South West £180.377 £137.042
North West £103.975 £94.017
East Anglia £69.866 £54.157
East Midlands £81.387 £73.637
West Midlands £88.304 £67.398
Scotland £72.357 £63.565
Yorks & H'side £79.374 £58.918
Wales £40.595 £42.125
North £37.608 £28.798
Northern Ireland £14.904 £6.791
UK £1.382 billion £1.060 billion