Why is demand for equity release increasing?

It is more than just a financial transaction, says expert

Why is demand for equity release increasing?

Research has shown that the number of equity release cases has rapidly spiked over the past year, with 44% of all equity release applications in the year’s first quarter directed towards remortgaging.

What is causing this increase in demand for equity release? Rudy Khaitan, managing partner at later life lending specialist Senior Capital, shared his thoughts on the importance of equity release in the current economic climate.

Khaitan explained that equity release had become a financial tool for asset-rich pensioners to help combat the cost-of-living crisis.

“In today’s society, many over-55s find themselves in a paradoxical situation – they are ‘asset-rich’ due to the value of their homes, yet ‘cash-poor’ with limited disposable income,” he said. “As the cost-of-living continues to rise, many find themselves struggling to make ends meet, despite owning valuable properties.

“Equity release offers a solution to this dilemma by enabling homeowners to tap into the wealth tied up in their homes.”

In addition to enhancing their quality of life through a much-needed cash injection, Khaitan said pensioners had also been able to utilise their asset wealth by helping their children step onto the housing ladder amid a period when the average two-year fixed mortgage rate had almost topped 7%.

Growing interest in equity release also came at a time when pensioners were beginning to outnumber children, while slashed finances meant retiring comfortably had been put on hold for millions across the UK.

With the average pension pot now at just £107,300, some 22% of pensioners had reduced or stopped spending on medications and a further 5% had skipped meals, based on statistics provided by charity for older people Age UK.

This had contributed to a 23% year-on-year increase in people turning to equity release as a vital lifeline during the cost-of-living crisis.

“Equity release can provide a much-needed cash injection to enhance their quality of life, cover unexpected expenses, or even help their families,” Khaitan said. “It is more than just a financial transaction; it’s a means of bridging the gap between asset wealth and living standards, ensuring that those who have worked their whole lives to build their assets can finally reap the benefits of their hard work.”

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