The Equity Release Council wants regulators and the government to promote later life lending services as research shows more people are considering the option as part of their financial planning.
A new report from the council, published yesterday (June 17), showed that 51 per cent of those aged over 45 saw their property wealth play a part in their financial planning, with those aged 45-64 most likely to agree.
The council polled 2,503 homeowners aged 45 or over in May and found that a further 44 per cent felt that taking out a mortgage or a loan to access property wealth in later life was becoming a more common way to manage money while 40 per cent saw it as a ‘reality’ of ageing.
On top of this, nearly one in four (24 per cent) planned to use property wealth to help family members while they are still alive while 47 per cent said it was a ‘nest egg’ for unexpected expenses.
According to the report, national property wealth has surpassed £4trn. Older households depend on this wealth more, the research showed, as household wealth makes up 40p in every £1 of over-65s’ wealth and 47p for over-75s.
The older generation also own more of the housing market than they used to.
The over-55s now make up 51 per cent of owner-occupiers compared with 39 per cent in 2004, while 16-44 year olds now represent 30 per cent — down from 42 per cent across the same time period.
Some 62 per cent hold more than £125,000 of housing equity while one in three own at least £250,000 worth of property.
The vast majority (66 per cent) thought they may need to access money from their property either now or in the future, but almost three in four (72 per cent) wanted to live in their property for as long as they could, and this ‘home for life’ mentality grows stronger with age, according to the report.
However, property largely remains an untapped resource during people’s lifetimes, with only 4 per cent of over-65 homeowners having used property wealth to support themselves in the last year and 3 per cent to support friends or family.
While there is significant intent to use – or consider — residential property as part of later life planning, the levels of current activity reported by the Financial Conduct Authority suggest more needs to be done to encourage people to take proactive steps, the report stated.
The Equity Release Council called for action from consumers and their families, the industry, regulators and the government to support financial education, product development, consumer safeguards and policy planning.
The council said later life education and guidance needed to start earlier in people’s lives and that they should be encouraged to consider the possibility of using property wealth.
It called on the government to create a cross-party later-life commission to help meet the long-term needs of people in later life as well as a Minister for the Elderly, who can ensure the broader social and financial issues important to later life members are recognised.