As we all know, becoming a first-time buyer is getting more difficult by the day, as thousands or even millions of young workers up and down the county scrabble around trying to save enough to put down their first deposit.
Getting on the property ladder was once a step most would take in their early 20s, and getting a deposit together was nowhere near as difficult as it is now. But today’s average first-time buyer is now 30 years old and has to fund a deposit of around £32,000 – far higher than what their parents or grandparents first home was likely worth in total, and which, rather staggeringly, is almost double the amount first-time buyers had to put down in 2007.
However, thousands of older homeowners who have benefited from the relative ease of buying a property in the past, plus the then rapid house price inflation experienced in the past few decades are helping their younger relatives join the ownership club via equity release.
For a product that most people in the wider population still feel is the domain of the elderly, it is fantastic to see so many helping their relatives get a headstart in their own lives. Some 38% of our advisers at Bower Retirement reported in our quarterly Adviser Tracker research that ‘helping the family with things like deposits and bills’ was one of the main reasons their clients took out equity release.
Looking ahead, we as an industry should make a bigger deal of this than we are. Equity release is allowing the baby boomer generation who profited from most recent house price inflation give back to society and their families. Essentially, equity release is helping level the playing field for many young first time buyers, many of whom have become totally disheartened with the way property values show no signs of slowing down.
The lifetime mortgage does not just help the elderly homeowner fund a retirement of leisure and financial freedom, but it’s also giving the leg up the young deserve onto the housing ladder. We should be making more noise about this.
Andrea Rozario is chief corporate officer at equity release specialist Bower Retirement