Retired homeowners are boosting their finances by an average £76,967 as the equity release market continues to break records, according to data from Key.
Key’s Equity Release Market Monitor shows customers released nearly £5,500 more on average in the three months to 1 October 2018 compared with the same period last year (£71,483). The total value of new property wealth released in the three months increased by 25 per cent on the previous year to £933.9m and plan sales grew by 16 per cent to 12,133.
Key found the money released through equity release is typically used for a variety of different expenses. In Q3 2018, two-thirds (66 per cent) used some or all of the cash to improve their homes or gardens – often ‘age proofing’ them to ensure they can stay in their homes. More than a quarter (27 per cent) gifted some or all of the money to help family or friends, and 30 per cent used the proceeds of equity release to repay unsecured debts.
Key chief executive officer Will Hale says the figures show the market is on track to hit £4bn worth of equity released by the end of 2018.
“On a regional basis, we have seen 102 per cent more equity release in Scotland this quarter (£40.2m) than at the same time last year (£19.9m). While this is modest compared to the amounts currently being released in the South East (£260.7m) and London (£168.6m), it certainly suggests that there is a growing acceptance of the use of housing equity to support financial needs in later life in this region and therefore potentially offers increased opportunities for advisers to engage with customers.
“Drawdown (63 per cent) accounts for well over half of the new plans taken out while lump sum accounts for 37 per cent. This is a clear indication of the desire for people to use equity release to manage their finances over the course of their retirement rather than as an answer to a single issue and supports the product development in the market which has created more flexible options for customers. However, with more options comes more complexity and therefore it is more important than ever for customers to seek specialist advice when it comes to considering equity release solutions.”