Retired homeowners cashed in £641.8 million in property wealth during the first half of the year as the equity release market continued to grow strongly, analysis from over-55s specialist adviser Key Retirement Solutions shows.
This represents a rise of 26 per cent on the first half of 2013 when £508.4 million was released from property; while plan sales rose 5 per cent to 10,013 from 9,540 in the same period.
The average loan taken by customers rose by 17 per cent to nearly £65,000, according to the group’s Equity Release Market Monitor for the first half of 2014. Key says this demonstrates growing confidence in using property wealth to improve standards of living in retirement, driven by the strength of the housing market.
Money released is increasingly being used to improve standards of living, with 66 per cent of customers using some or all of the cash to fund home or garden improvements compared with 55 per cent last year. Thirty-five per cent of customers used the cash to pay for holidays, compared with 32 per cent in 2013.
The analysis also shows the importance equity release plays in easing the burden of debt in retirement, with substantial numbers of retired homeowners clearing debts – 20 per cent used some or all of the money to pay off mortgages, while 30 per cent are clearing credit cards or loans.
Dean Mirfin, group director at Key, said: “Equity release is making a major contribution to retirement planning for thousands of homeowners and that is underlined by the growth in the average loan size of nearly £10,000.
“The massive changes on the way people fund and save for retirement highlight the increasing role that property wealth will play and the equity release market is ideally suited to the new retirement flexibility.”
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