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Equity release news
AIFA and AMI
widens standing
Housing wealth key says PPI
committee
The Association of Independent
Housing wealth could play a "The main way that home many people are emotionally
Financial Advisers (AIFA) and
greater role in supporting ownership supports retirement for attached to the family home or
retirement in the future, according many people is to reduce living may wish to leave the home as a
the Association of Mortgage
to the Pensions Policy Institute costs in retirement. Owning your bequest. Pensioners may also be
Intermediaries (AMI) have
(PPI). own home in retirement can concerned about the costs and
announced that they are to widen
A report published by the reduce living costs relative to risks of releasing housing equity."
their existing equity release
Pensions Policy Institute, paying rent (not having any Keith Haggart, Prudential's
standing committee to
commissioned by Prudential UK housing wealth) by around 30 per director of lifetime mortgages,
encompass all issues related to
and Europe, considers the role that cent for a single person and by added: "The first PPI report in this
the retirement market.
housing wealth could play in around 40 per cent for a married series highlights the fact that,
The joint group will now supporting retirement for today's couple. during retirement, income needs
consider the full decumulation pensioners and for future "This research shows that if change. At retirement people
landscape, significantly including generations of pensioners. current demographic and spend more money on leisure and
equity release. The expansion of The report shows that housing homeownership trends continue, require a higher level of income.
the standing committee comes as
wealth could play a greater role in the number of households where This need for income falls as travel
AIFA and AMI launch a series of
supporting retirement in the the head is aged over State Pension costs reduce and then rise again in
guides for advisers working in the
future, but not everyone has Age with higher value housing later retirement as health costs
decumulation market later this
housing wealth and those who do wealth which could be used to increase.
year.
have housing wealth do not always release equity to support retirement "However, for most people their
Andrew Strange, director of
view it as a way to save for - whether by downsizing or using income is fixed or rises only in line
Policy at AIFA and AMI, said:
retirement. For most people, commercial equity release products with inflation. This report shows
"Our recent report ‘Financial
housing wealth will be a - could increase by a third, to 5.2 that the real benefit of equity
Planning Through Retirement’
complement to saving in a private million households by 2030. release is it allows customers to
or occupational pension, not a "There may still be a number of supplement their retirement
demonstrated the need for much
substitute. barriers to the use of housing income to match their individual
more work to ensure the
Niki Cleal, PPI Director, said: wealth to support retirement: needs."
decumulation market is
considered holistically, rather
than at a ‘product level', to work
efficiently and deliver the best
outcomes for consumers. This is
Property provides better returns
already a growth area for both
IFAs and mortgage advisers so we While property values remain security from investing in cash. ISAs as their investment vehicle
want to work to help members uncertain, the third annual When asked last year, a third of this year, but the number still
interested in this sector. Scottish Widows Savings and respondents would have chosen to relying on the idea that property
"We believe strongly that there
Investment Report1 reveals that invest in cash ISAs for their long- provides better returns than other
must be a holistic approach to
the nation’s view of investing in term investment needs. This year investments is alarming. Another
the decumulation market from
property has been impacted by the 42 per cent of those saving have reason that our love affair with
industry, Government and
unprecedented economic chosen a cash ISA for their long- property is potentially dangerous
regulators. We must ensure that
environment in last couple of term investment needs. is that it can distract people from
consumers can access good,
years. However , investors' However, although few the benefit of diversifying into
professional advice. And the
actions do not necessarily mirror homeowners view their property other asset classes such as
industry needs to provide access
their sentiments. as a long term investment 45 per traditional savings vehicles. It is
to a wide range of services and
The report reveals a shift in the cent of people still believe that important to save, even a small
way people view their property as property usually or always amount, to get into a saving habit
products to help people make
a long term investment; over a provides better returns than other and build up some easily
best use of their assets. That is
third (36 per cent) of people said investments, showing Brits can't accessible capital.
why we are shortly going to
owning a property this year is not shake off the sentiment of relying “Nearly half of Brits (48 per
launch a series of good practice
as good an investment as before on property for their retirement. cent) still believe property is a
guides for advisers working in the
due to changing market Anne Young, savings expert at good investment and that it will
decumulation market.
conditions. Furthermore, only 8 Scottish Widows commentsed: withstand an economic downturn.
"I encourage all those AIFA
per cent of people who are "Nobody can predict what will Confidence in the long term
and AMI members interested in investing for the long term chose happen in the property market. property market has obviously not
this area to join this expanded property as their long term However, savers should be been shaken. If anything it has
group and help to influence the investment product choice. The cautious about relying on returns strengthened as when questioned
decumulation market." research also indicates that from their property as a long term last year, only 28 per cent believed
All those interested in joining
people's attitudes to other saving investment. We have already seen property would withstand an
the working group should
and investment vehicles are many unfortunate homeowners in economic downturn and thought
contact Julia@aifa.net or call 020
changing, with an increase in the negative equity. It is good news that prices would continue to
7628 1287.
number of investors seeking that more people are choosing rise.”
October 2009 Mortgage Introducer www.mortgageintroducer.com
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