There’s a growing demand for lifetime mortgages among women over 55 who live alone and face shortages in income, an analysis by Canada Life Home Finance has found.
Research from the Equity Release Council’s Spring 2019 report shows single women over 55 accounted for over a quarter of new equity release agreements made in late 2018, up 50% from the previous year.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said: “The outlook for women in retirement is concerning and the recent findings that show women will outlive their savings by over 12 years is something that policymakers must wake up to.
“However, what we are seeing more immediately is that women are being resourceful. They are aware of the fact that the wealth in their property can help them.
“The growth in women using lifetime mortgages demonstrates how equity release can fill the pensions deficit faced by women in retirement.
“We’re aware that 20% of lifetime mortgages are used to cover daily living expenses in retirement, and the recent uptick in single women taking out loans indicates they’re using the wealth contained in their houses in order to live more comfortably in retirement.”
A key driver of this growth is that, for many, pensions won’t provide enough income in retirement.
Canada Life’s Retirement Sentiment Index found that women believe they will need £1,421 a month after tax to live comfortably in retirement, however, figures from the Department of Work and Pensions show that this is not being achieved.
On average, single female pensioners received £206 per week in 2017-18, which leaves a difference of over £500 between what women earn and what they would like to earn.
In addition, the World Economic Forum suggests the average British woman will outlive her savings by 12 years, putting extra pressure on women’s finances in later life.
Canada Life Home Finance said considering this gap, women are responding by viewing their wealth holistically and looking to the equity contained in their homes to bolster their retirement incomes.
An additional demographic shift which points to a continuation in the trend of single women taking out more lifetime mortgages, is the increasing number of people living alone.
Recent ONS data showed there has been a 20% rise in solo living amongst those aged 65 or over who will be reliant on just one income to live on.
Watson added: “The fact is that we’re living longer and that many people live alone in their retirements. This will put pressure on people’s finances. We expect the trend of people using their property wealth to help relieve some of this pressure to continue.
“As a sector we must be ready and able to help people through sound, regulated financial advice and to provide flexible products with which people can navigate their way through this emerging financial challenge.”