The ever-increasing prospects of the equity release market

Published: 29/03/2012

There are many reasons why equity release looks an attractive option for brokers and clients alike. From the baby boomers heading towards to retirement to the staggering £1.5 trillion of UK personal debt, equity release could become a viable solution for many looking to plug a financial gap.

For many from the baby boom generation, property is their only substantial assets as retirement looms. With falling pension values and declining annuity rates failing to provide a significant “top up”, there is a very definite financial void to fill and equity release appears the natural option.

There is no escaping the rising cost of living. With everything from utility bills to the cost of care for the elderly is going up more and more people are approaching retirement in a less than ideal financial situation.

There used to be a general resistance to equity release. Many were reluctant to use the capital from their home as it would impact on their children and grandchildren’s inheritance. At the beginning of the recession, there were also unrealistic expectations regarding property values with homeowners reluctant to succumb to lower valuations.

However with children encouraging their parents to take care of their own needs first, homeowners releasing equity as a means of providing an early “inheritance” for loved ones struggle with debt or getting on the property ladder and a general acceptance that property values are no longer what used to be, equity release is increasing in popularity.

The flexibility of equity release means homeowners can receive their money in a way which best suits their circumstances, in either a lump sum or in regular monthly instalments.

With so many factors impacting equity release activity, the market looks strong. Q4 2011 saw the highest level of equity release advances (£215.9m) since 2009 and a year-on-year of 15 per cent¹. These impressive figures stand the industry in good stead for a prosperous 2012.

¹Mortgage Strategy (Jan 2012)

Content correct at time of publication

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