Older homeowners are taking advantage of an increase in the number of products now available in the equity release market. A new report says innovation in the market serving homeowners in later life means product options have doubled in just two years, up to 139 in August from 58 in August 2016.
In its Autumn 2018 Equity Release Market Report, the Equity Release Council says the rise in the number of older people looking to maximise the value of their property to help younger generations buy a home or to pay for their own care costs is driving innovation in the market.
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Unlocking housing wealth
Its report noted that for every £1 of savings withdrawn from flexible pension payments in the last month, 50p of housing wealth was unlocked using equity release.
Meanwhile, the number of homes bought in England with a gift or a loan from family or friends has hit a new high of 1.1 million.
In 2007, there were just 24 product options available for homeowners looking to release some or all of the equity in their property. By contrast, in August 2018, there were 139 different products available to consumers, up from 58 a year ago.
Among the most popular products is the lifetime mortgage that now gives a homeowner the option to ringfence their equity, meaning they will retain some of the value of the property in the future.
In the first half of 2018, a total of 38,912 households where the homeowner was aged 55 or over used equity release products form the Equity Release Council.
Increased product flexibility
David Burrowes, chairman of the Equity Release Council, said: “These figures highlight the rise in new products and increased product flexibility, which is helping older homeowners to fulfill a host of pressing personal, social and financial needs.
“This innovation has brought more competition to the later life lending arena, while maintaining the standards and protections which ensure equity release products are futureproofed to provide good outcomes for consumers.
“As customers navigate their way through a growing range of product choices – including retirement interest-only mortgages – the appropriate advice, guidance and support is needed to weigh up the various benefits, costs, flexibilities and protections to ensure they are suitable to meet both current and future needs.
“Industry and regulators must continue to work to ensure customers are aware of all the options available to them when deciding how best to support themselves and their families in later life, taking all their assets – including pensions, savings, investments and property – into consideration.”
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