Homeowners aged 55 and above are increasingly using their property wealth to pay back debts on loans, credit cards and mortgages, the latest Market Monitor of equity release lender Key Retirement shows.
The total property wealth released in the first three months of 2015 increased to nearly £341 million from £330 million last year.
The average amount released to boost retirement income went up by around 9 per cent to £66,730. The average amount released by London residents was nearly double the overall average, at £130,000.
What people mostly used the money for were home and garden improvements, with 61 per cent of pensioners choosing to spend the newly-released funds on that in the first three months of this year. In the same period of 2014, that proportion was 67 per cent.
Around 31 per cent of customers used the money to pay off credit card and loan debts, compared to 26 per cent a year ago.
Around a quarter (23 per cent) used it on mortgage repayments, compared to 21 per cent in the first quarter of last year.
Key’s Market Monitor shows the average age of equity release customers rose to 71 in 2015, from 68 previously, with customers’ average property value increasing to nearly £267,929 from £212,244 previously.
Dean Mirfin, technical director at Key Retirement, said: “Property wealth is a major part of retirement planning and the contribution it can make is substantial with customers releasing nearly £67,000 on average.
“Debt in retirement is a growing issue with large numbers of customers using money to clear mortgages as well as credit card debts and loans. That highlights a real need for lenders – including equity release providers – to develop solutions to help.”
