Analysis by the Equity Release Council (ERC) showed this surpassed the previous high of £5.6trn in 2022 when the housing market was “buoyed by pent-up demand after the pandemic”.

The report continued that total UK mortgage debt of £1.6trn compared with an overall property market value of £7.3trn.

The ERC said this gives an average loan to value of 22.2%, with the remaining 77.8% owned by equity or cash.

The trade body said the average LTV has decreased from 28.9% 10 years ago, so for every £10,000 of property owned, £7,220 is supported by cash, therefore mortgages only cover a small share.

 

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Over-55s have £3.4trn of property equity

The ERC’s analysis found that the average over-55 owner-occupied household in the UK has £321,213 of equity in their home.

The average amount of equity for an over-55 owner-occupied household in England stands at £340,676, and comes to £214,743 in Scotland, £240,436 in Wales and £206,417 in Northern Ireland.

From a regional perspective in England, London has the highest average equity at £583,618, followed by the South East at £426,749 and East of England at £378,686.

The total amount of property wealth among over-55 homeowners came to £3.4trn.

The average equity of £321,213 in the over-55 category is worth almost 10 times the average pensioner couple’s annual net income of £36,168.

The ERC said the contrast showed “how private property wealth can play both a personal and policy role to help meet later life living costs and welfare needs for the UK’s ageing population”.

The trade body said older households had been hit hard by post-pandemic inflation and faced losing their winter fuel payments as the government looks to bring in means-testing.

It said lifetime mortgages could allow over-55s to access the equity tied up in their property, adding that the product was highly regulated and could only be sold with advice. It also has additional safeguards like no-negative equity guarantees and guaranteed tenure for life.

 

Government should ‘look beyond pensions’ to boost retirement income

Jim Boyd (pictured), CEO of the ERC, said while there had not been double digit house price growth this year, the property market had started to recover which has led to total property equity reaching over £5.7trn.

He continued: “Much of this is in the hands of the older generation and our findings make it crystal clear that your prospects of living comfortably in retirement will rest on firmer foundations if you own your own home and include property wealth in your financial plans.

“Spare funds aren’t easy to come by in the current climate, either for households or for government so it’s vital that we help older homeowners consider the role that the £3.4trn worth of property wealth can play in later life finances.”

Boyd said this was a huge amount tied up in “bricks and mortar” which could help boost income, pay for care or help get others onto the property ladder.

“Financial advisers need to ensure that when they are speaking to their clients, the role of property is discussed – even if the right approach is ultimately to look at other options. We need to encourage informed choices rather than simply relying on what works for previous generations.

“We urge the new government to look beyond pensions to improve retirement incomes and stimulate the economy. There is a compelling need for government to set out its vision for property wealth in later life funding: a thriving later life mortgage market can help to achieve both of these outcomes,” he added.