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Thursday 15th July 2010
More equity unlocked by pensioners
The amount of money pensioners unlocked from their homes soared by more than a fifth during the first half of the year, research has indicated.
Retired homeowners took out equity release schemes worth £455 million during the six months to the end of June, 22% more than the amount they unlocked during the same period of 2009, according to equity release adviser Key Retirement Solutions.
The group attributed the steep increase in the money unlocked through the schemes to renewed confidence in the housing market, following the price rises seen since the second quarter of 2009.
It added that many pensioners had also faced an income squeeze due to low interest rates and rising inflation.
Equity release enables retired people to take out a mortgage against the value of their home, which does not have to be repaid until they die or sell the property.
The number of equity release schemes taken out rose by 5% year-on-year during the six months to the end of June to 10,318.
Drawdown plans, which enable people to unlock money in stages, remained the most popular type of equity release schemes, accounting for 72% of all sales.
The average age of someone unlocking equity from their home was 69 during the first half of the year, up from 67 in 2009, while people unlocked an average of £42,555 each.
The main reason people gave for unlocking equity continued to be to fund home improvements, at 60%, while 36% used the money to go on holiday and 33% used it to repay debt.
Other reasons people gave for taking out one of the plans included helping family or friends, paying off their mortgage, and using the money towards paying regular bills.
Source: Press Association