As parents invest in their children’s home ownership dreams, the equity release market is on track for a record year.

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As parents invest in their children’s home ownership dreams, the equity release market is on track for a record year.

From nearly £884 million in the third quarter of 2020, the total value of equity released increased by 18.8%.

According to data from equity release adviser Key, customers took out just over £1 billion in property wealth in the three months to the end of September, putting the equity release market on track for a record year.

The total value of equity released increased by 18.8% from nearly £884 million in the third quarter of 2020, despite the fact that the number of equity release plans taken out fell by 3.2 percent year on year to 10,333 from 10,671 in the third quarter of 2020, remaining below pre-pandemic levels.

Those who chose to take money out of their homes did so to pay off debts and give money to their children or grandchildren.

42% of the money given to family and friends was put towards a down payment on a house, while 36% was given as an early inheritance.

The market, which has long hovered around £1 billion in lending a year, is on track to hit £4 billion by the end of the year, according to Key.

In the last three months, three-quarters of customers have taken out drawdown plans, with the average initial advance standing at £57,183 and customers still having the ability to draw a further £301.5 million, according to Key.

The average customer is 70 years old, with 49% of equity release customers being between the ages of 65 and 74.

According to Will Hale, Key’s CEO, the significant increase in lending was fueled in part by an increase in the number of older homeowners refinancing from a traditional mortgage to a lifetime mortgage.

“We’ve seen an increase in people using equity release to support their families, manage their current debt, and remortgage their existing equity release plans,” he said.

“While many plans were put on hold during the pandemic, we expect to see people looking to increase discretionary spending as they consider how to fund their later-life ambitions.”

The figures show that “the benefits of accessing property wealth are routinely shared across generations and increasingly woven into the country’s social fabric,” according to Jim Boyd, CEO of the Equity Release Council.

“Significant funds continue to pass directly to,” he added.

UK news summary from Infosurhoy

As parents invest in their children’s home ownership dreams, the equity release market is on track for a record year.

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Equity release market is on course for a record year as parents invest in children’s home ownership dreams

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Equity release market is on course for a record year as parents invest in children’s home ownership dreams

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