Retired homeowners take out record lump sums to help younger generation

 
Sebastian McCarthy
Older generations are freeing up more cash through mortgaging their houses

Retired homeowners are freeing up much more of their property wealth this year amid efforts to help younger family members afford a route onto the property ladder.

More than £1.7bn of equity was released in the first six months of this year, rising 37 per cent on the same period one year ago, as an increasing number of pensioners mortgage their houses to gain more disposable income.

Customers releasing money from their homes received an average of nearly £78,000 with homeowners in London releasing an average of £133,000.

The findings, compiled by UK equity release adviser Key Retirement, show that nearly one in three retired homeowners gifted some or all of the money to family members.

Read more: Why 70 per cent of people will have to keep investing after retirement

Dean Mirfin, chief product officer at Key Retirement, told City A.M: "Increasingly mums and dads are looking at all the money they have ploughed up in their houses, and asking their children whether they want it now rather than later as inheritance."

Mirfin said: "The growth in gifting underlines how much can be achieved when the average amounts being released are as much as £78,000. The Bank of Mum and Dad, or Gran and Grandad are changing lives, and not just their own."

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Equity release, which is being fueled by a rise in the over-65 population, is the process in which homeowners take out a mortgage on their property, typically a quarter the value of the house, which will be payed back with interest when the house is sold.

Growing demand for equity release has also been driven by greater spending on households, with retirees forking out more money for new bathrooms and kitchens.

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