Dreaming of a Comfortable Retirement, UK Homeowners Turn to Property Wealth

A significant number of UK homeowners are turning to their property wealth as a financial safety net. Recent findings from the Equity Release Council indicate that more than three in five UK homeowners, representing a staggering 18.7 million individuals, are contemplating tapping into the equity of their homes to support their financial needs later in life. This trend has seen an increase from 2021, where 57% of homeowners shared similar sentiments.

Shifting Perspectives on Mortgages and Borrowing

The concept of carrying a mortgage into older age is gaining acceptance among the UK populace. The latest studies show that 39% of homeowners now believe that it’s becoming more common—and equally acceptable—to have a mortgage during retirement, up from 34% in 2021. Notably, only a quarter of homeowners completely dismiss the idea of accessing their home’s equity in their later years.

Equity Release as a Retirement Strategy

The research conducted by the Equity Release Council underscores the pivotal role of property in securing financial stability during retirement. Among homeowners aged 55 and above, nearly half now view their property wealth as essential for meeting their later life financial needs. This sentiment is even more pronounced among the younger generation, with 75% of homeowners under 55 considering leveraging their property wealth in the future. The enthusiasm is most marked in the 35-44 age group, where interest in equity release has surged from 67% to 78% since 2021.

Priorities for Using Released Equity

Homeowners are primarily interested in using released equity to cover care-related expenses and enhance their retirement income, with 17% and 16% citing these reasons, respectively. Other motivations include funding travel and supporting the financial wellbeing of younger family members, with many opting to gift significant amounts towards down payments for their relatives’ first homes.

The Financial Landscape and Market Responses

With the average annual cost of residential care now nearing £46,000 in major UK cities, and a growing reluctance among the elderly to move into care homes, equity release is becoming an increasingly popular option to finance at-home care. The equity release market itself has evolved to meet these changing needs, offering more flexible and diverse products.

Jim Boyd, CEO of the Equity Release Council, stresses the importance of viewing property wealth as a viable asset and not just bricks and mortar. He advocates for a holistic approach to retirement planning that includes pensions, property, and investments, tailored to individual needs.

Mark Gregory, Founder and CEO of Equity Release Supermarket, echoes this sentiment, highlighting that the changing attitudes towards borrowing into retirement reflect the competitive nature of the current market and the insufficient pension provisions and savings among older generations. He points out the sector’s significant evolution in accommodating these consumer demands.