Older homeowners are using their property wealth to clear debt and help family with nearly three-quarters of the £884 million released going to boost their finances and support relatives, according to new analysis from equity release adviser, Key.
Figures from the company’s Quarter 3 (Q3) Market monitor report highlight that the market has returned to more normal trading conditions with £884 million being released over the period, this is a boost from Q2 (£521 million) when the market was hit by the initial shock of the pandemic but in line with Q3 2019 (£887 million).
The report also found that a quarter of older homeowners (25% or £221 million) was used to support family and friends via gifting
Around 11% (or £97 million) of the amount released is spent on home improvements – mainly for age-proofing houses so people can stay in their homes – while just 3% (or £26 million) was spent on holidays.
The Q3 figures build on the trend seen across 2020 toward customers using equity release to make their finances as robust as possible by cutting their outgoings. Spending on more aspirational categories like home renovations (-6% to 11% in Q2 2020) and holidays (-5% to 3% in Q3 2020) fell steadily over the last nine months.
Will Hale, CEO at Key, said “In Q3, we saw a return to more normal market conditions driven by many customers looking to make their finances more robust by reducing their outgoings and/or supplementing their income. While the payment holidays offered by big residential lenders have certainly benefitted many, older borrowers who either fear redundancy and a tough climb back into work or early retirement have looked to use equity release to reduce the financial pressure they are feeling. Safe in the knowledge that not only are rates at historic lows but through modern flexible equity release plans they can service interest or make ad hoc capital repayments if they so wish to mitigate the impact of roll-up interest.”
|Uses of Equity Release Based on Value|