Equity release customers funding home improvements

Published on

Key Retirement’s 2014 Equity Release Market Monitor shows 63% of customers – compared with 58% in 2013 –  used some or all of the money they released to fund home and garden improvements.

However, credit card and loan debts as well as mortgages remain a major issue – 30% of customers used cash to get out of the red while 22% paid off mortgages, Key’s study shows.

Key’s Market Monitor builds on the Equity Release Council’s figures which showed an all-time high of £1.38 billion property wealth was released in 2014 as record numbers of homeowners took out plans.

The Market Monitor shows the average age of equity release customers rose to 71 in 2014, from 69 previously, with customers’ average property value increasing to nearly £260,000 from £238,000 previously. That helped drive a 15% rise in the average amount of property wealth released by UK equity release customers to nearly £64,800.

Across the country 11 out of 12 regions saw growth in the average amount of property wealth released with Londoners taking the most at £127,412 – around 19% higher than the average £107,224 released the previous year. Homeowners in Yorkshire & Humberside released the lowest amount on average at £44,647.

The number of plans sold rose in nine out of 12 regions with Northern Ireland recording a 70% increase and Yorkshire & Humberside recording a rise of 18%.

Dean Mirfin, group director at Key Retirement, said:  “Equity release makes a major contribution to retirement planning with average customers releasing nearly £65,000 of their property wealth.

“Attitudes are shifting as pensioners recognise their property investment, if used wisely, can change their lifestyle. The launch of pension flexibility will accelerate that process with all the evidence showing people are spending their money sensibly.

“Debt in retirement however is a major issue with large numbers of customers using money to clear mortgages as well as credit card debt and loans. That highlights a real need for lenders – including equity release providers – to develop solutions to help.”

Region Number of plans sold 2014 Number of plans sold 2013 Average value released  2014  Average value released 2013 
South East 4,700 4,419 £74,257 £67,729
London 2,077 1,879 £127,412 £107,224
South West 2,668 2,482 £67,598 £63,663
North West 2,186 2,181 £47,561 £49,714
East Anglia 1,209 1,139 £57,798 £54,832
East Midlands 1,643 1,776 £49,541 £47,827
West Midlands 1,672 1,551 £52,821 £50,110
Scotland 1,530 1,571 £47,283 £46,655
Yorks & H’side 1,778 1,508 £44,647 £45,070
Wales 794 908 £51,122 £53,509
North 762 724 £49,360 £45,895
Northern Ireland 331 194 £45,010 £40,308
UK 21,350 20,331 £64,748 £56,045

Around 66% of all sales were drawdown plans, including enhanced drawdown which offers better rates to people with health or lifestyle conditions, compared with 34% from lifetime mortgages including enhanced products. The market share of enhanced plans rose to 13% from 8% previously underlining the focus on innovation in the market.

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

London’s luxury lettings market surges 154% as wealthy tenants opt to rent

London’s prime lettings market has more than doubled in size during the first half...

3.3 million households locked out of home ownership

More than three million households have been priced out of home ownership since the...

Carlyle to acquire intelliflo from Invesco in $200m deal

Global investment group Carlyle has agreed to acquire intelliflo, the London-based provider of cloud-based...

LMS becomes affiliate member of the Conveyancing Association

The Conveyancing Association has welcomed LMS as its newest affiliate member, marking a formal...

Molo cuts UK resident buy-to-let rates

Molo has reduced its standard buy-to-let fixed rates for UK resident landlords. The changes mean...

Latest publication

Latest opinions

Bridging the Pond: How large is the US bridging finance market, and compared to the UK?

When we first got started with LendInvest in the UK, post the financial crisis,...

Passing the affordability exam

As teachers and students of various ages have spent August nervously opening exam results...

Investors are changing their approach – and lenders should too

The buy-to-let market never stands still, but the pace of change in recent years...

Leasehold fees, specialists and the need to shop around

Leasehold properties account for around 20% of all dwellings in the UK, and while...

Other news

London’s luxury lettings market surges 154% as wealthy tenants opt to rent

London’s prime lettings market has more than doubled in size during the first half...

3.3 million households locked out of home ownership

More than three million households have been priced out of home ownership since the...

Carlyle to acquire intelliflo from Invesco in $200m deal

Global investment group Carlyle has agreed to acquire intelliflo, the London-based provider of cloud-based...