Pensioners receive £71,500 boost from their homes

 

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Retired homeowners are boosting their finances by an average £71,500 from their property wealth, according to new analysis from leading over-55s finance specialist Key Retirement.

 

Its detailed report on trends in the market following on from the Equity Release Council’s figures show continued demand for lump sum plans which now make up 36% of total sales and strong growth for enhanced plans for customers with lifestyle conditions.

 

Enhanced drawdown and enhanced lump sum lifetime mortgages made up 33% of sales in the three months to October 1st compared with 19% a year ago as total plan sales and property wealth released hit a new record.

 

Key’s Q3 Equity Release Market Monitor shows total property wealth released by new customers in the three months increased by 18% from the same period last year to £749 million while plan sales climbed by 26% to 10,477.

 

The average retired homeowner released £71,500 of property wealth from a house worth £325,000. In London pensioners made an average £133,000 from houses worth £655,000 while in the South East of England the average house price was more than £400,000 with pensioners releasing more than £84,000.

 

Sales of equity release plans increased in every region of the UK with Wales seeing growth of 51% year-on-year and East Anglia an increase of 46%. The only area which saw a fall in the value released was Scotland but plan sales still increased reflecting a drop in the average amount released.

 

 

Dean Mirfin, chief product officer at Key Retirement, said: “The new record for the third quarter means sales for the first nine months of the year have already nearly matched the total for all of 2016.

 

“The growth in sales of enhanced equity release to a third of the market demonstrates the importance of quality advice in ensuring that customers receive the maximum value or lending terms from their property wealth.

 

“Lump sum plans are maintaining their share of the market as they increasingly tend to be more appropriate for younger retirees looking to repay outstanding mortgages.

 

“Increased competition and rate cuts across the equity release market are enabling customers to dramatically improve their quality of life in retirement and address a wide range of financial issues.”  

 

More than one in five (22%) customers used property wealth to pay off outstanding mortgage debt, while 30% used the cash to clear debts and 36% used it to go on holiday. Over a quarter (26%) used the money to help family and friends up from 19% in Q3 2016. However, the most common reason for releasing cash was to get their home retirement ready. Almost two thirds (64%) used the wealth for home and garden improvements.

 

Drawdown plans – which enable customers to release money as they need it and keep costs down – made up 64% of sales while lump sum plans accounted for 36% of sales, both unchanged year on year.

 

The detailed picture across the country is shown below in the table
 

Region	Number of plans sold Q3 2017	Number of plans sold Q3 2016	Total value released Q3 2017 (£ million)	Total value released Q3 2016 (£ million)
South East	2,827	22,302	£238.651	£195.535
South West	1,383	1,026	£96.687	£75.985
London	1,143	957	£152.552	£130.094
North West	900	702	£43.988	£38.056
East Midlands	870	679	£46.255	£37.930
East Anglia	793	544	£49.034	£40.749
West Midlands	677	620	£34.923	£34.862
Yorkshire & Humberside	580	479	£26.961	£25.386
Wales	470	311	£22.223	£17.322
Scotland	462	449	£19.928	£23.883
North East	293	213	£14.740	£11.041
Northern Ireland	77	66	£3.231	£2.910
UK	10,477	8,348	£749.178	£633.758

Anyone looking to release equity from their home can get Key’s independent guide to equity release by calling 0800 531 6027 or visiting www.keyadvice.co.uk/equity-release/request-a-free-guide