Pensioners could free £611 billion with equity release

April 26, 2009 by Brendan O'Neill

CeRER

News

Equity release is a hot topic in the media at the moment and the Prudential has released figures this week demonstrating that struggling pensioners are sitting on a goldmine with approximately £611 billion worth of equity in their homes.

The Prudential Equity Release Index shows that despite the recent decrease in property prices, there is still an estimated £611 billion equity that could be unlocked using an equity release product.

Pension annuity rates have been falling and those that hold guaranteed annuities have seen their rates fall as much as 10% in the last twelve months. This fall in pensioners’ incomes has meant that many pensioners are struggling and need to search for other potential sources of income like equity release.

By using equity release, pensioners can use the money they have built up in their property over the years to boost their income without having to move home.

The Director of Lifetime Mortgages at Prudential commented:

“Every homeowner is being affected by falling property prices, but it’s important to remember that many people, especially retired homeowners, bought their homes years ago and have benefited from growth in the housing market. Even in this depressed market, the vast majority of retired homeowners still have considerable wealth tied up in their properties.”

He continued to add that equity release

“has an important role to play in providing retirement income particularly when other sources are under pressure”

Mortgage advisors that wish to advise on equity release products, often referred to as ‘lifetime mortgages’ will need to have undertaken their CeRER training and passed their exam as well as having taken the CeMAP exam.