Saturday Read: Cash-strapped home owners turn their properties into personal cash machine
The amount of wealth being released through equity release could pass £6.5bn by 2025 after more than a decade of increasing popularity and growth.
Overall, in the ten years following 2011, the amount of property wealth being freed up through equity release increased by 508 per cent, reaching the 2021 total of £4.8bn.
Back in 2011, UK homeowners released £790m worth of property wealth for themselves via an equity release product.
This figure increased steadily over the ensuing decade, with annual growth reaching as high as 42 per cent, according to mortgage broker Henry Dannell.
Just two years (2019 and 2020) reported any kind of drop in wealth release totals, but the largest of these drops being 0.8 per cent.
Based on the past decade of growth trends, Henry Dannell has calculated that the amount of wealth being released will surpass £5bn this year, pushing past £6bn by 2024, and hitting £6.5bn in 2025.
One reason for the growing popularity of equity release is the increasing amount of products available on the market.
In the past two years alone, the number of products has increased by 65.8 per cent, from 401 in 2020 to 665 in 2022.
“The benefits of equity release are clear – free up some personal wealth while maintaining the right to live in your home. It’s of no surprise that it’s an option more people are now opting to take up, ” the director of Henry Dannell, Geoff Garrett, commented today.
“Indeed, the only reason it has taken until now for the amount of money released to reach £5bn is public awareness and the accessibility of related products,” he explained to City A.M.
“I think it’s also fair to say that societal attitudes towards inheritance may be changing.”Geoff Garrett
“Older people, who may be parents, grandparents, or even great-grandparents are less likely to wait before gifting their wealth to their family and loved ones,” Garrett conintuend.
“Instead, they’re seeing how difficult it is for young families to save for their first home, as an example, and choosing to provide financial support at a time when they’re still around to see the joy their hard-earned lifetime of wealth can bring to the people they most care about.”
“As the current cost of living crisis starts to throw more and more people into financial and emotional difficulty, I would expect to see an acceleration in the number of people choosing the equity release option in order to support themselves and their families,” he concluded.