CML research has found that older home-owners now hold more than £40 billion worth of equity in property but currently draw on little more than one per cent of this to provide an income or other funding to improve their quality of life.
The research sets out some of the key issues for developing safe, simple and standardised products that would allow older people to draw on the wealth in their homes to provide an income while continuing to enjoy security in old age.
The expansion of home-ownership and rising property prices over time means increasing numbers of older people already have considerable wealth in their homes.
The CML said development of the right types of products could lead older people to look more favourably on equity release, particularly as the real value of state pensions continues to shrink.
Peter Williams, deputy director-general at the CML, said: “Value for money and risk are key issues that have to be addressed in the development of equity release products and older people and their relatives will need to feel more confident about what they can deliver.”
“But a co-ordinated effort among interested parties could lead to the development of well-regulated, standard equity release products, able to satisfy a variety of needs in old age.”
He added: “The potential for equity release is huge, with room for all lenders to participate. This would ensure competitiveness in the market, to the benefit of consumers. As long as the risks are properly addressed and the limitations clearly explained, the development of suitable equity release products could enhance the lives of large numbers of older people.”
