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Equity release market continues to expand

17th July 2015 • Notebook

Retired homeowners cashed in more than £750m of property wealth in the first six months of the year as the equity release market continued to expand, analysis from leading over-55s finance specialist Key Retirement shows.

This is an increase of 17%, with an average total per homeowner of £68,500. The findings reveal wide regional variances ranging from average releases in the North West of over £53,000 to over £142,000 in London.

The analysis claims that money is being used to boost standards of living in retirement with 58% of customers using some or all of their cash to improve their home or garden while 28% have used their property wealth to pay for holidays.

Family and friends are also benefiting from retired homeowners’ property wealth with 25% of over-55s handing out cash to relatives.

However mortgage debt – including interest-only loans – is emerging as a major issue with 23% of customers paying off home loans with some or all of the money, compared to 20% for the same period of 2014. Around 29% also used the cash to pay off credit cards or loans.

Equity release customers are getting older – the average age rose to 71 in 2015, from 69 previously – but they are also wealthier thanks to house price rises with average property values rising 9% to £271,248 from £249,108.

Dean Mirfin, Technical Director at Key Retirement said:  “Property wealth is making a massive contribution to retirement planning and the equity release market is growing rapidly in response with double-digit growth. Cuts in pension allowances and contribution levels plus the review of pension tax treatment underlines that property investments are major assets which should be considered as part of anyone’s retirement planning.”

Across the country eight out of 12 regions saw growth in the value of property wealth released with the North East recording a 50% rise, the South East 35% and London a 30% increase. The value released dropped 13% in the North West. Eight out of 12 regions recorded rises in plan sales with three virtually unchanged. London saw a 28% rise and the North East a 31% increase.

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