In the first quarter 40% of equity release customers took out a lump sum to reduce their debts, up from 30% in Q1 2015 – and Key said it believed this was down to customers using lump sums to pay off interest-only shortfalls.
Mortgage prisoners are increasingly using lump sum equity release plans to pay off interest-only mortgages, Key Retirement’s Q1 Market Monitor indicates.
In the first quarter 40% of equity release customers took out a lump sum to reduce their debts, up from 30% in Q1 2015 – and Key said it believed this was down to customers using lump sums to pay off interest-only shortfalls.
In the first quarter of 2016 £415m was released, up from £341m last year, with the average amount being released rising by 12% from Q4 2015 to £76,000 in Q1 2016.
Dean Mirfin, technical director at Key Retirement, said: “It’s long been predicted that as the first large wave of interest only mortgages maturities begins more customers will turn to equity release to plug this gap.”
He added: “The record high number of equity release plans being taken out underlines how property wealth is an important part of retirement planning.
“Pensioners are making the most of successful property investment and rising house prices to substantially improve their retirement standard of living. However retiring in debt is still a major issue.”
In London typical equity release customers withdrew £134,000 of property wealth.
Nigel Waterson, chairman of the Equity Release Council, said: “There is a growing argument for equity release to feature on all homeowners’ checklist as an option to consider as part of their retirement and estate planning.”
