October saw new record highs in people releasing their equity, despite the wider UK housing market continuing to face housing issues.
Leading equity release provider; Responsible Equity Release, recorded that release plans rose by almost by a fifth (19.2%) compared to September and up by three-quarters (76.5%) on October 2016. Between August and October, the number of releases was 24% higher than the previous three months.
Compared to September, the amount of equity released in October was 3.8% higher, and it more than doubled compared to October 2016.
Homeowners in the North East released more than seven times the equity from their properties in October compared to the previous months, while twice as many homeowners in the East Midlands took out plans compared to September.
You would expect this pattern to spread through the wider nation, but London was amongst one of the areas that saw a drop in the number of homeowners releasing equity from their homes in October. One would argue that this is due to concerns in property prices as the media are heavily pushing these concerns to the London market.
Whilst many owners in the London area are sitting on a small pot of gold, there is some resistance to release equity while prices are low, even though plans usually come with a ‘no negative equity’.
Following this, the Bank of England has turned the rate rise tap on, meaning that we could see a steady increase of rates rise over the next few years. This could be great news for pensioners but right now, what does 0.25% rates rise actually mean?
Honestly, not a huge amount.
It’s unlikely to have financial impact – especially as banks are holding back on passing on the rate rises to savings accounts.
Mathew Wood “This does leave pensioners in the same difficult financial position – dire savings growth, inflation most likely to rise beyond 3% and living costs ever increasing. Added to this, investments and savings aren’t providing a source of income so what are they to do? For many, their home is their main investment and can be some source of income stream and so its no surprise to see equity release grow as a result – especially for this demographic.“
The equity release industry has proved to be well placed to provide an actual retirement fund as a solution to difficult financial living situations.
Because of this, the industry has listened and are adapting their model to fit what consumers want and need.
After all, when millions of people have invested into their home, why shouldn’t they be able to make their property work for them during their lifetime.
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