House price increases across the UK mean there is now £382 billion worth of equity available in older homeowner’s properties, new analysis has revealed.
The study by Canada Life comes after figures on the equity release market revealed a 23% rise between 2017 and 2018 in the number of homeowners unlocking the cash tied up in their homes.
Now, using public data on UK property homeownership and the latest house price data from Nationwide, Canada Life has found homeowners aged 55 and over have seen a collective increase of £2.5 billion in equity since July 2018.
At the beginning of the year, Canada Life reported, nearly one in five financial advisers believed house price would soar by up to 5% in 2019.
Alice Watson, head of marketing and communications at Canada Life Home Finance, said despite a less positive outlook from other commentators, this has proved right across many areas of the UK.
“While this isn’t the case for every region,” she said, “the overall rise in house prices is great news for homeowners, whose largest asset is usually their property.”
Recent caution
While, overall, demand for equity release has increased significantly over the last year, figures out this week suggest the market has subdued slightly in recent months.
Data from equity release adviser, Key, showed a year-on-year increase of 5.6% in the number of plans taken out in the first half of the year. Average loans fell slightly in value by £2,000 but older homeowners still released nearly £9.3 million in property wealth a day in the first six months of year.
Key thinks the lull was in response to current economic conditions. Will Hale, CEO at Key said: “While the key market drivers of low pension saving and substantial property wealth remain, the over-55s are taking a cautious approach to accessing the value tied up in bricks and mortar at the moment but as confidence returns we do expect the market to pick up.”
Meanwhile, Watson thought, going forward, the market looked positive. She added: “With more equity now available, we anticipate demand for equity release to continue rising. Homeowners are continuing to look at property wealth holistically, and are increasingly viewing it as something that can help them enjoy their retirement.”
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