Home > Mortgages > Mortgage Data
More people pulling equity from homes
Equity release broker’s data shows 36 per cent of people are using equity to repay their mortgage.
More people used their property equity to repay a mortgage in 2011, according to equity release broker Responsible Equity Release.
Some 36 per cent of customers used their equity to repay a mortgage, up 31 per cent on 2010.
In most cases, Steve Wilkie, managing director at Responsible Equity Release, said this was either because of a shortfall in their endowment policies and other investment vehicles, or higher living costs, which left little surplus income to meet monthly mortgage repayments.
Around 23 per cent of customers, up 22 per cent on 2010, told Responsible Equity Release they used their equity to help struggling family members, whether to pay down their debts, support their incomes or provide the deposit required to buy a home.
A further 16 per cent of customers, up 2 per cent on 2010, used their equity to create a cash surplus for the regular payment of soaring utility bills.
The other 25 per cent was spent on a “variety of things” such as home improvements, holidays, etc.
Also, faced with high living costs, soaring debts and stringent lending criteria, the number of homeowners enquiring about equity release doubled during 2011.
Last year, the total number of enquiries received by Responsible Equity Release rose by 91 per cent compared with 2010.
Mr Wilkie said in such a “dire economic climate” it was unsurprising that there had been a sharp increase in the number of people pulling equity from their homes.
He said: “Five or six years ago, the majority of people releasing equity did so to improve the quality of their retirement, but these days a growing number of equity release plans are being used simply to make ends meet.
“Although home and garden improvements in the run-up to retirement remain at the heart of equity release, there is no doubt that the dynamic of the sector has changed in recent years.
“What is also interesting is that a large percentage of the enquiries we now get are through word-of-mouth, which suggests people are more familiar — and comfortable — with equity release.”
