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Image problem still holds back sales

The number of people who would be able to use equity-release products to boost their income in retirement will increase by a third by 2030 if current trends in the housing market continue.

A report from the Pensions Policy Institute commissioned by Prudential has found that there could be a 40 per cent increase in the value of housing wealth that pensioners could release to support their retirement from £251bn in 2009 to £359bn in 2030.

But the report says there are a number of barriers to the growth in the use of housing assets to support retirement, including emotional ties dissuading people from downsizing, reducing entitlement to means-tested benefits and wanting to pass on their house as a bequest to their children.

The report found that equity-release products still have an image problem after misselling and bad product design in the late 1980s.

Other barriers are that interest rates charged by providers often appear high relative to other mortgage products and that no major banks curr- ently offer these products.

PPI director Niki Cleal says: “The main way that home-ownership supports retirement for many people is to reduce their living costs in retirement.”

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