Research from LV= has highlighted how consumers are increasingly viewing their property as an important part of retirement planning.
The LV= Wealth and Wellbeing Monitor – a quarterly survey 4,000+ UK consumers – found that 11% (5.8 million) of adults are planning to use the value of their home to help fund retirement.
And half (50%) of consumers aged 55-74 would expect any property they own to be taken into consideration by their adviser when planning their retirement finances.
Clive Bolton, managing director ofsSavings and retirement at LV=, said:“The equity release market has grown over the past decade as consumers understand that it is a mainstream retirement planning option for people who want to unlock the value in their home to enjoy the retirement they want.
“The growth in the market over the past 10 years has been driven by a combination of factors: house prices have risen strongly, interest rates on lifetime mortgages have fallen sharply and equity release products have become a lot more flexible.
“Modern plans now allow policyholders to make voluntary or partial repayments with no early repayment charge for helping to boost the popularity of the sector.
“I expect that the equity release market will grow strongly in the second half of the year as lockdown ends and life begins to return to normal.
“Retirees are likely to use equity release to pay for new experiences after lockdown and a year of missing out, while those people who have been forced to take early retirement because of redundancy will consider equity release to clear debts.”
Stephen Auckland, CEO at Age Partnership, said:“Over the past 12 months, most people have re-evaluated aspects of their lives, including their plans for how to finance their retirement years.
“The later life mortgage market has been incredibly resilient throughout this Covid period, but the demand for lifetime mortgage products is likely to grow even further in the next few years, as the full ramifications of repaying the costs of Covid are revealed. The good news for our customers is that the latest lifetime mortgage products have flexible repayment options, exceptionally low interest rates and can assist with both immediate and long-term requirements.
“While the requirement is there to access funds, it is essential customers seek out the advice of gold standard, regulated, equity release advisors. They will carefully discuss and understand individual circumstances and will recommend a product that meets personal objectives. This is a lifetime decision and requires the highest standards of advice and empathy.”
Figures from the Equity Release Council show annual lending to new and existing customers totalled £3.89bn in 2020 – up from £945m in 2009.