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Pension pressure brings surge for equity release

Equity-release specialists bel-ieve the recent increase in business is due to the economic strain on pensioners rather than positive engagement with the product.
Safe Homes Income Plans, the equity-release trade body, last week published figures showing the value of the market saw its biggest quarter-on-quarter increase since mid 2008. Between the second and third quarters of this year, the market rose by 4 per cent from £196.7m to £205m.

The average release also increased by more than £1,000 up from £45,702 in the second quarter to £46,754 in the third quarter.

Equity Advice managing partner Stuart Wilson says the economic strain on pensioners is the likely cause of the increase.

He says: “I think this is the early stages of a sustained increase of equity release but sadly not for the right reasons. It is reflective of the economic challenges that pensioners are facing and the fact they cannot get money from other sources, whereas they could two years ago. But it is alleviating some of the economic problems that some pensioners are facing.”

Bridgewater Equity Release head of sales and distribution Peter Welch says: “Those who suggested that equity-release levels would continue to fall have been proved wrong and it is now obvious that the second quarter was something of a blip, with major events such as the general election having an impact on the sector.

“When the outlook is unknown, people often put off major decisions like releasing equity from their homes and this clearly happened in the second quarter.

The third-quarter data reveals the true buoyancy of the equity-release market and that people are still looking at and going ahead with equity release.

“I would not want to see equity release purely and simply as building a foundation of people’s misery. But if it can alleviate pensioners’ financial worries in the current times, then that has got to be a good thing. I think that is where the pick-up in equity release is coming from – advisers are seeing more and more customers doing equity release for debt.”

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