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&#39Equity-release may help buy homes for children&#39

Parents releasing equity from their home could be the answer to the problem of affordability for first-time buyers, according to Britannia Building Society non-executive director Professor Bridget Rosewall.

Speaking at the Building Societies Association annual conference in Harrogate, Rosewall said one way of combatting the growing exclusion of FTBs from the housing market is for parents to use equity-release products to fund their children&#39s property purchases.

She highlighted how the housing boom has left many parents with considerable equity in their homes, which they could use to give their children an opportunity to get on the housing ladder.

But Rosewall, who was an adviser to former Conservative Chancellor Ken Clarke, also warned of the potential fallout for equity-release products if house prices fall. She reminded the conference of the plight of many homeowners in the mid-1980s who were left with negative equity on their homes after releasing cash.

Rosewall said: “With the mortgage equity withdrawal market up to the levels of the mid-1980s, there could be trouble ahead if house prices do not continue to support it.”

Other building societies also tipped the equity-release market for potential growth. Chelsea Building Society said it is already targeting customers with equity-drawdown proposals as it feels the product holds so much potential.

Chelsea believes the housing boom has left many older homeowners capital-rich but income-poor. By releasing equity from their home, they can enhance retirement income.

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