Why more homeowners are accessing money from their property

Following the challenges of the pandemic, UK homeowners have explored new options for financial support – both as a means of financial stability, or to help support new lifestyle choices. With 32% of homeowners seeing their mortgage as being like an investment in their future, equity release has become an attractive choice for homeowners over 55 to access new value from their property.

To mark the 30^th anniversary of the Equity Release Council​’s founding, it has released a new report that catalogues the trends and perspectives that have shaped the growing popularity of equity release.

Key findings from the Equity Release Council research

The research looked at industry and government data and surveyed 5,000 individuals. It found that: 

• Almost one in three homeowners (32%) see their mortgage as being like an investment in their future

• Nearly half (48%) of homeowners with a mortgage agree they are able to save more because their loan is cheaper than renting.

• Two in five (40%) homeowners agree it is becoming more acceptable to have a mortgage in later life, while 57% are interested in accessing money from their property as they age

The trends behind an increase in equity release

The Equity Release Council says releasing property wealth is now established to the point of being an ​‘important building block of financial wellbeing’ for homeowners over 55, attributing its growth to several factors, including:

• Less job security – even before the pandemic, there has been a decline in ​‘job for life’ careers, which has had a negative impact on pension savings
• Low interest rates – it has become more challenging for younger generations to build an adequate pension income
• Delayed retirement – whilst today’s retirees began their retirement at an average age of 61, the state retirement age is set to reach 68 before 2040
• Using pensions to pay off mortgages – while the majority of homeowners think it’s important to be mortgage free by retirement, one in three are not sure this is achievable
• Changing perceptions of property wealth – more homeowners see having a mortgage in later life as a positive step for financial freedom and flexibility

Frontline equity release experience

“The Equity Release Council report endorses our experience as advisers. Since setting up 55plus Equity Release 15 years ago, enquiries have risen year on year, and attitudes to releasing property wealth to fund retirement have gradually shifted,” commented director Jan Johnson.

“Equity release used to be something that that only a very small proportion of homeowners aged 55 and over considered; now it is much more commonly seen as a mainstream financial strategy, to be considered along with other strategies when planning your later life-finances. It’s never going to be the right solution for all situations, but more and more couples and individuals and their financial advisers are understanding that it can be an effective solution that can help you achieve your later life-goals,” she added.

If you want to learn more about how equity release might work for your individual situation, then please get in touch.