Homeowners are “increasingly” turning to equity release to unlock wealth for their retirement, with many considering the product some years before stopping work.
Canada Life found 12 per cent of the 1,020 UK homeowners it surveyed in March planned to release equity as a “supplement” to their retirement income.
The average age those who said they would consider releasing equity was at 66 years old, two years before their pension age.
With recent changes to pension legislation, those in their 40s - which made up the majority of those Canada Life surveyed - will see their pension age rise to 68 between 2044 and 2046.
According to the latest government figures, a full basic state pension currently pays £179.60 per week, or £9,350 a year.
The demise of final salary pensions and savings rates still often considered inadequate mean many more people will look for ways to bolster their income in retirement.
Alice Watson, Canada Life’s equity release expert, said: “Increasing the state pension age has quite simply moved the goal posts for many people who had imagined and planned to retire at 66. People may choose look at home finance to help fund these extra two years."
She continued: “This average age of an equity release customer has been slowly decreasing as people take a more holistic view of their retirement.
"Home finance is no longer a product of last resort and can be used well as another element of retirement planning, alongside pensions.”
But whilst retirement wealth was one use for equity release, there were plenty of others, including clearing an existing mortgage (45 per cent), making home improvements (34 per cent), consolidating unsecured debt (20 per cent), and establishing an emergency fund (15 per cent).
Last month, data released by retirement specialist Key Group showed the number of equity release products available hit a 15-year high in 2021, with around 769 different plans currently on offer. This figure has more than doubled from 306 in 2019.
Back in the eighties and nineties, the equity release industry took a knock after a number of scandals left people with big amounts of debt. In more recent years however, demand for equity release options has steadily risen, fuelling the surge in products on the market.
Watson told FTAdviser Canada Life was “repositioning [equity release] as a retirement option, and taking the holistic approach.”
But she added: “There’s a bigger behavioural science around it too. The product isn’t benefiting from word of mouth, which is slowing things down. So we also need to educate the advisers which have some of the misconceptions.”
The Equity Release Council, founded in the nineties to get the troubled industry back on its feet, is trying to legitimise the sector and its product suite by acting as a recognised stamp of approval on providers’ websites.
The council is also in the process of organising briefings with MPs and peers across Westminster and Whitehall to bring industry-related issues to the fore.