Equity release will support even more families this year following a record-breaking 2021
Equity release is fast becoming a popular way for homeowners aged 55 or over to access a significant amount of cash in later life.
A growing number of over 55s are releasing cash from their homes for a variety of uses including:
- Gifting a lump sum to help a younger family member get on the property ladder
- Paying off an existing mortgage or debts
- Helping to live more comfortably
in retirement In 2021, we saw a significant rise in the amount of equity being released from UK homes. In fact, throughout the year, there was a 28 per cent increase compared to 2020 – up to £4.4 billion*.
There are several reasons behind the sharp uplift witnessed last year; the country starting to open up again following a restriction-heavy year prior, a tighter squeeze on disposable income, and rising house prices.
According to the UK House Price Index, property value was up 10 per cent in November last year compared to the same time in 2020.
Equity release specialists, Key, also saw similar uplift from those in the equity release market, with the average property used for releasing equity valued 9 per cent higher across England, Scotland, Wales and Northern Ireland compared to 2020.
It’s not always the South that benefits
As you’d expect, that translates to a significant sum, with home values increasing by more than £32,000 across the UK compared to 2021, leaving the average property used for equity release now valued at a little over £358,000.
Of course, as well as other factors, house prices depend largely on geographical location. And as you’d expect, London and the South East saw significant rises across 2021 - with London prices escalating by 11 per cent, and the South East by 8 per cent.
However, it was in fact the North East which experienced the biggest growth last year, with the average property value used for equity release increasing by a whopping 14 per cent over the course of 12 months. Wales and East Anglia weren’t far behind either, with property values growing by 13 and 12 per cent respectively.
Higher property value gives clients more options
A client having more equity in their home allows them to see equity release as a viable later life financial solution, even if they’ve never considered it before.
Having more equity available means they can use their home’s value to help fund a more rewarding retirement. Or alternatively, it gives them the option to take the cash they need while ensuring there’s still something left to pass on to their loved ones at the end of their plan if that’s important to them.
So, as those in later life attempt to tackle the well-documented rise in living costs, they may well already have the solution to a more comfortable and rewarding retirement in the four walls around them.
How you can help your clients with equity release
If you have a client who you believe may benefit from equity release but are unsure of the next steps, Key Partnerships can help.
Key Partnerships provides a robust referral process to help you broaden your advice proposition without compliance responsibility.
Alongside supporting your clients, for every case that completes, you could also add a valuable income stream to your business. In 2021, the average Key Partnerships referral fee paid on each completed case was £1,980**.
*Key’s Market Monitor FY 2021
**Key Partnerships average referral payment per completed case across the UK in 2021