Those most likely to own their homes outright are less likely to want to draw on their equity to fund their retirement, a survey for the Council of Mortgage Lenders found.
Younger homeowners aged less than 35 are most likely to want to unlock some of their housing wealth by the time they get to retirement but those aged between 65 and 74 view the idea negatively.
Bob Pannell, chief economist at the CML, said outright owners in that age bracket, who make up the lion’s share of homeowners in that cohort, do not view equity release as a sensible option.
He said: “As we look across older age groups, our current snapshot suggests that a confidence about unlocking housing equity progressively gives way to a growing resolve not to do so.
“But, with the exception of the oldest age cohort, these views are not set in stone.
“As pension arrangements become progressively less generous or complete for those approaching retirement in the future, we are likely to see both growing demand for unlocking housing wealth and opportunities for mortgage lenders and other providers to develop products that address the financial needs of older households.”
Take-up of lifetime mortgages has increased considerably over the past few years, but from a low starting point.
Council of Mortgage Lenders records show 24,000 borrowers took out £1.5bn in the 12 months to September but this represents just 0.8 per cent of the total value of residential mortgage lending.
Mr Pannell said: “While it is true that more firms have begun to offer lifetime mortgages and other equity release products, many of the high street and other mainstream lenders are interested but wary of the reputational risks associated with lending to older households.”
damian.fantato@ft.com
