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zugzwang

Equity Release Levels Hit All-Time High Among Over-55S

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Here they come again in their orthopaedic sandals and Fleetwood Mac t-shirts.

You only live once... and everybody that comes after you can get f***ed.

http://www.theguardian.com/money/2016/jan/25/equity-release-levels-record-high-2015-over-55s

A record amount of housing wealth was unlocked by homeowners aged 55 and over in 2015, with £1.61bn withdrawn through specialist equity release plans.

Lending was up by 16% on the previous year’s figure, the Equity Release Council said, as homeowners used lifetime mortgages and reversion plans to access cash from their homes.

More than 22,500 deals were agreed for the year – the highest number since 2008 – and the value of borrowing now exceeds its pre-recession peak by a third.

Lifetime mortgages, which allow borrowers to take out a loan against a property and only pay the interest on its sale, were the most popular form of borrowing, while reversion plans, which allow homeowners to sell part of their home but continue to live there, accounted for less than 1% of deals agreed.

The figures highlight how for many retirees property is their biggest asset, and how rising house prices have allowed some to build up considerable equity. The ERC said customers borrowed an average of £70,670 each.

Nigel Waterson, chairman of the council, said the figures were “the latest sign of growing reliance on housing wealth as a key pillar of later-life financial planning”.

He added: “Housing wealth is often people’s greatest asset, and it makes sense for equity release to be on every homeowner’s checklist to consider as part of their retirement and estate planning. At the same time, it is not suitable for every circumstance, which is why professional financial advice and independent legal advice are essential.”

Simon Chalk, equity release expert at retirement advisers Age Partnership, said a 9.5% rise in house prices in 2015 had made peoples’ homes “potentially their greatest asset”.

“During the year, more over-55s benefitted from their increased housing wealth than before as annual equity release lending reached a new high.

“The strong growth in the market is set to continue into 2016 as house prices see no sign of slowing down and people become more aware of the importance of their housing wealth.”

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Edited by zugzwang

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As someone pointed out on twitter....they are releasing their money to give to their children to buy a house.

#ProperPonzi

That'll end well.

Especially as these reverse mortgage lenders are of sound moral character, have integrity, patience, and are endowed with exceptional leniency.

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As someone pointed out on twitter....they are releasing their money to give to their children to buy a house.

#ProperPonzi

Following on from the pent-up demand discussion, this is another reason why I fear pent-up demand could scupper a proper HPC (with government assistance). I think I'm right in saying that normally gifts of money over £4,000(?) could (in theory) be taxed. So unless it's a loan or joint ownership the BoMD equity release to buy a house could be taxed. Here's a Government wheeze that'll in theory cost them very little HTB IR, gifts to (grand)children to buy property are totally tax free and win them boomer points.

As far as I'm concerned they'll try anything to stop a proper correction in prices, including encouraging equity release through tax relief or just making it even easier to do.

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As someone pointed out on twitter....they are releasing their money to give to their children to buy a house.

#ProperPonzi

In my experience, that's spot on.

'Housing wealth'. Idiots. It's zilch unless you can cash in and live nowhere.

Most of these schemes are real rip.

In my sister's case, it was the only way to get a little peace and a 40 year old son out of the house when she retired.

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I keep hearing people saying that prices can't really go up (i.e. they see that lending is pretty much maxed out) much more but that they can't go down! Yeah right (i.e. they can't see lending going down :P). I also agree that alot of this is parents pushing their kids to take on a massive mortgage to get on the ladder.

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Its probably a "record number of over 55s" because there is a record number of over 55s.

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What goes up must come down...what is gained on paper will eventually be lost/spent.......70% of Rich Families Lose Their Wealth by the Second Generation. ;)

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Its probably a "record number of over 55s" because there is a record number of over 55s.

That's a fair point, worth considering when you look at any of this headline stats. We would need more info to see if the BoMD is having an effect!

Edited by renting til I die

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I do sometimes wonder if high house prices are maintained by the state in order to fund care home costs rather than the state having to pay.

Edited by LiveinHope

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Its probably a "record number of over 55s" because there is a record number of over 55s.

Well said that man.

Not mention the record number of under 55s who don't have any homes, let alone positive equity.

What a truly rubbish paper the Guardian is these days.

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I do sometimes wonder if high house prices are maintained by the state in order to fund care home costs rather than the state having to pay.

Yep.

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Its probably a "record number of over 55s" because there is a record number of over 55s.

And possibly because widespread availability of these schemes is relatively new.

And HPI minted boomers are quite a novelty as well.

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I do sometimes wonder if high house prices are maintained by the state in order to fund care home costs rather than the state having to pay.

Good point, something I'd totally forgotten about. Could the government might find itself between a rock and a hard place (aww what a shame :lol:) do they encourage equity release to prop-up HPI / control HPC or discourage it in order to pay the care costs of the elderly (but if there's an HPC houses will be worth less and will pay for less care)?

The chickens are coming home to roost! For the past two decades politicians have gotten away with doing the popular thing instead of the right thing. The Tories may are probably already cursing Ed Milliband for handing them the 2015 GE and letting the (supposedly) unelectable in 2020 Jezza Corbyn get the Labour leadership.

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