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Wealthier homeowners drive 31 per cent equity release uptick

  • 25/05/2021
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Wealthier homeowners drive 31 per cent equity release uptick
The amount of equity that lifetime mortgage customers are releasing has leapt more than 30 per cent in 12 months as low rates have driven a “middle class stampede” according to a specialist broker.


Adviser Responsible Life reports the average amount released by customers has risen 31 per cent in a year, climbing from £86,000 to £112,700 in April.

Wealthier homeowners are driving the uplift drawn by historically low interest rates and the boost in living standards that equity release can provide, added the broker.

Rates plummeted

Rates on lifetime mortgages have more than halved in recent years to below three per cent and the average value of homes being used to secure lifetime mortgages is over 19 per cent higher year-on-year, at £487,000 , double the average UK house price of £256,4053.

The broker said house price inflation of just over 10 per cent to March only partly explains the shift as the average value of the properties being mortgaged is over eight per cent higher.

Wealthier customers are using the cash for a variety of reasons including gifting to children and loved ones, home renovation, paying off existing interest-only mortgages and funding retirement.


House beautiful

The broker also believes that a pandemic home improvement boom buoyed by the extra time people were forced to spend at home during repeated lockdowns has helped to drive up the level of borrowing. Home improvement remains the second most popular reason to use a lifetime mortgage.

Steve Wilkie, executive chairman of later life mortgage broker Responsible Life, (pictured), said: “There’s no doubt there has been a middle-class stampede for lifetime mortgages over the past year thanks to interest rates sinking to historic lows.

“Wealthier homeowners have cottoned on to falling rates and now see lifetime mortgages as an affordable way to improve their standard of living in retirement. Gone are the days when they were considered a product of last resort. That couldn’t be further from the truth now.

“The pandemic has also played its part in driving up the level of borrowing. Repeated lockdowns have not only spurred huge housing demand but there has also been a home improvement frenzy.”

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