MIp31_equity news.qxd 22/1/09 14:42 Page 7
Equity release news
31
Pensioner debt
deepens
Demand for drawdown
Just Retirement has launched a new
study which shows one in four (24
per cent) people are approaching
retirement in debt.
With essential costs such as gas
reaches new high
and electricity increasing by over 40
per cent already this year, pensioners'
disposable income is shrinking fast -
potentially forcing many to live on
Tracking the demand for release do not get caught out by Mirfin said: "Whilst 2008 for
the breadline. As a result, concerns
individual equity release reductions in their property val- the mainstream mortgage market
about their ability to pay for day-to-
products throughout the year, ues. Drawdown plans enable you saw a considerable and ongoing
day living is becoming a real worry
2008 proved to be another to lock in a facility which then decline in the levels of new
for retirees, with nearly half (46 per
popular year for Drawdown, remains unaffected by fluctua- mortgage business, by compari-
cent) concerned about their deplet-
while Home Reversion schemes tions in property values, and son the equity release market
ing income.
remained steady and the anyone considering equity release has had a more resilient year.
Nigel Barlow, head of retirement
demand for Lifetime Mortgages should start looking into theses The past year proved tough for
solutions at Just Retirement said:
declined. plans. For this reason we would all financial service sectors,
"Reaching retirement shouldn't be a
This was one of the findings of expect to see demand for however the results for the
cause for concern; retirees should be
the 2008 UK Equity Release Drawdown plans increase further equity release market show that
looking forward to the prospect of
Market Monitor released by from still through the coming year." demand is still strong despite a
easing off the pressures of working
Key Retirement Solutions. It The market monitor shows year of house price deflation
life. Yet an increasing number of
found the number of Drawdown that the number of equity release and understandably issues of
potential retirees - one in four - are
plans taken out increased by 9% plans taken out by retirees confidence amongst consumers.
unable to rid themselves of their
in 2008 and now accounts for decreased by 14% from 2007 to The industry is well placed
debts, potentially taking them with
60% of all plans taken out. 2008, with the total amount of as we enter 2009 with a
them forever.
The demand for standard equity released in 2008 reaching healthier level of enquiries
"In response to the escalating
Lifetime Mortgages showed a just over £1.18 billion, a 14% compared to the same point in
financial hardship one in eight (12
decline from 43% to 36% year on decrease in comparison to 2007 2008.
per cent) of those approaching
year, while Home Reversion (£1.39 billion). It also found that "Although the results for the
retirement age are planning to con-
plans showed a slight decrease, during the last quarter of 2008 industry are down as a whole, we
tinue working in order to bolster
dropping to just 4% of all plans the number of plans taken out are pleased to report that Key
their income. However, with unem-
in 2008 from 6% in 2007. was down 8% on the same peri- Retirement Solutions' figures for
ployment figures estimated to reach
Commenting, KRS group od in 2007. The average amount the year bucked the market
2 million, it is possible that pension-
director Dean Mirfin said: released was £47,341, a 10% trend. As a result, Key now
ers will find it harder than ever to
"Throughout 2009 it is important decrease on the fourth quarter of arranges one in four of all equity
find work. With no obvious solu-
that those considering equity 2007. release plans in the UK."
tions being proposed to help those
struggling at retirement, the likeli-
hood that poverty amongst pension-
ers is set to spiral out of control.
"It is key for pensioners to be Prudential reveals
aware of what resources are available
to help stretch their income in retire-
ment. Retirees can bolster their
income by getting the most out of
their pension fund by shopping
homeowners' equity
around for the most attractive annu-
ity rate which provides an income
throughout retirement. Many peo-
The latest findings from Lifetime Mortgages, at Prudential has the highest rate of inflation
ple don't realise they may be eligible
Prudential's Equity Release Index said: "Every homeowner is being and still faces a significant rise
for an enhanced annuity if they have
reveals that despite falling house affected by falling property in the cost of living. For these
a health impairment or smoke
prices, homeowners aged 65 and prices, but it's important to reasons, more people are looking
which could significantly increase
over still have £692.06 billion of remember that many people, to release equity from their
their income. Additionally, those
equity in their homes. especially retired homeowners, homes to maintain or improve
who own their own home may be
Prudential's Index, which bought their homes years ago their standard of living in
able to generate funds or income
tracks the amount of equity held and have benefited from growth retirement.
from it.
in the properties of people aged in the housing market. Even in "Equity release should no
"The current economic climate
65 and over in England and this falling market, the vast longer be seen as a product of
highlights the importance of making
Wales, found that 42.45 per cent majority of retired homeowners last resort. Recent figures from
the most of your finances, so if in
of this equity belongs to those still have considerable wealth SHIP show that equity release
doubt it is important to seek advice
living in London and the South tied-up in their properties. business has increased by £60
as failing to do so could be an
East. "Despite the recent falling million since the first quarter of
expensive mistake.”
Keith Haggart, director of costs of petrol, retired Britain 2008."
www.mortgageintroducer.com February 2009 Mortgage Introducer
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