Retired homeowners release £9.5m a day in H1 2018

Written by Oliver Wade

Retired homeowners released £1.71bn of property wealth in the first six months of the year, as the equity release market continued its record-breaking expansion, according to the latest data from Key Retirement’s H1 2018 Equity Release Market Monitor.

The figures revealed that approximately £9.5m of property wealth was released every day in the six months to July, with equity release plan sales increasing by 29% over the same period in 2017.

Consumers are receiving an average of nearly £78,000 to boost their standard of living during their retirement, with families being one of the biggest beneficiaries of their property wealth gains. Around 28% of retired homeowners used some or all of the money for gifts for families, compared to 23% in the first half of 2017.

The total value of property wealth released to the end of June rocketed by 37% compared to the previous year, rising from £1.24bn to £1.71bn, and plan sales grew to 22,816 from 17,656.

Commenting on the statistics, Key Retirement chief product officer Dean Mirfin said: “Customer demand is driving the expansion in the market to new record highs enabling more retired homeowners to transform their finances.

“More money was released in the first six months of 2018 than in the whole of 2015 as records continue to be broken across the market with expert independent advisers playing a vital role.

“Property wealth is not just helping to transform an individual’s retirement planning but is also helping their families with their financial needs. The growth in gifting underlines how much can be achieved when the average amounts being released are as much as £78,000. The Bank of Mum and Dad, or Gran and Grandad are changing lives, and not just their own.”

Key Retirement found that the most common use of the money released in the first six months was to fund home and garden improvements, with 63% of retired homeowners spending a portion of their money on their houses, while 33% used the funds to pay for holidays. However, one in five of those who released equity used the money to clear outstanding mortgages during the first half of 2018, and 32% paid off credit card or loan debt.

The report found that the South East of England accounted for more than 25% of all equity release sales and nearly 30% of the total lending amount. Retired homeowners in London released an average of £133,000 of property wealth each, which is the highest figure recorded across the country, followed by the South East on nearly £90,000 and the South West on £77,000.

more 2 life CEO Dave Harris said: “The surge of sales revealed in Key Retirement’s research, particularly the release of £1.71 billion of property wealth in the first six months of the year, is reflective of the levels of activity we are seeing in the market. Although it is well known that later life lending is on the rise, this research reveals a sharp escalation, mirroring more 2 life’s own findings that the total retirement lending market is on track to surpass £142 billion by 2027.”

Harris further stated that equity release is becoming an “increasingly popular” choice for homeowners, and presents positive opportunities for advisers and lenders to meet the demand by “further enhancing their services”.

“Equity release has the potential to cater to a wide range of circumstances. It is a significant time for the industry and we look forward to seeing the market continue to expand as we deliver innovative product offerings that provide excellent choice and flexibility to retirees,” Harris concluded.

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