Figures from Retirement Advantage show that more and more over-55s are using equity release loans to buy new property.
The data shows that in Q2 2018, 10.3 per cent of customers used the money from equity release for a new property as compared to 6.6 per cent in 2017.
Other uses for loan included a new car (14.1 per cent), to fund a holiday (23 per cent), and the biggest proportion, to improve their existing home/garden (44.6 per cent).
More sobering is the fact that 22.3 per cent of customers used the money to meet their daily living expenses, and 24.6 per cent to consolidate unsecured debts (totals exceed 100 per cent due to multiple answer questions).
Recently the Equity Release Council reported that homeowners released a total £971m from April to June – a 12 per cent increase from the first three months of the year.
Retirement Advantage Equity Release head of product and marketing Alice Watson says: “It is unlikely this [wave of property purchases] is down to a wave of downsizing. We know from research we conducted earlier this year downsizing is not popular – only one in five older people say they’re prepared to consider it. Instead, the increase suggests that the attraction of property as a long-term investment endures. For over-55s keen to own new property, wealth tied up in their existing home can make a significant financial contribution.
“Using existing property wealth in this way also offers further evidence that equity release customers today are proactively using the products to make major financial decisions. This reinforces the rapid maturity across this booming sector.”
Last week Moneyfacts research revealed that the majority of over-55s would feel confident in taking out an equity release plan without seeking advice. However, only FCA regulated financial advisers can sell equity release plans, meaning that receiving advice in this context is a legal requirement.