Rising house prices have pushed the overall valuation of UK housing stock to a record £7 trillion, according to the Equity Release Council.
The life lending body says the country’s housing stock has reached this level after annual house price increases hit 12.8% in May as “strong demand” continued to push prices higher.
He adds that over the past four years the use of share release has increased across the UK with the biggest increases in Wales, up 40%, in the North West, up 38% and in the West Midlands up 31%.
As UK households have collectively taken on more than £100bn in additional mortgage debt over the past two years, rising prices have continued to drive up the equity in these homes, according to the Market Report. organization’s fall 2022.
It adds that 22.8% of average property in the UK is now held through mortgage debt – the lowest figure since before the 2007/8 banking crisis – with the remaining 77.2% being held in shares or cash.
The report highlights that landlords and landlords have earned the equivalent of £46,000 in equity per household since the summer of 2020.
Like many debt products, these home loans have risen in line with increases in the Bank of England’s base rates, with the average rate for capital release products rising from 4.10% to 5.74% between the start of of the year and August, according to the study.
He points out that only four complaints about equity release products have been confirmed according to the Financial Ombudsman Service in the first half of this year.
The report adds that seven out of ten complaints about the release of shares to the Financial Ombudsman Service come from family members or an executor rather than the customer.
The end-of-life body “urges anyone considering releasing their home’s equity to include family members or loved ones in their decision, where appropriate.”
Equity Release Council Chairman David Burrowes says: “The stock release continues to evolve from an outlier to a national trend, with modern flexible products helping to meet a variety of needs.
“Rising house prices mean that although national mortgage debt has increased, it is secondary to the vast pools of housing capital that can help multiple generations achieve financial security by giving them more options and of choice in the management of their money.”
Key CEO Will Hale points out: “On some occasions I’ve seen comments about London-centric equity release or something that only those in the South can benefit from.
“Today’s figures from the Equity Release Council clarify this misconception and highlight that home equity is being used across the country to pay down mortgages, help families and improve retirement income.
“Advisors have an important role to play in helping people understand all of their options and the potential impact of the choices made in the long and short term. Equity release has become an integral part of normal retirement planning for a wide range of different clients. »
Managing Director of HUB Financial Solutions, Simon Gray, adds: “Where providing consumer protection advice on the release of capital is the highest priority, we therefore fully support the advice’s call for potential clients to ‘they involve their family in the decision-making process, where appropriate. This is something our advisory team actively promotes.
“When equity release is the best course of action for a client, it is important that it is clear that this is a long-term commitment with long-term implications that are better understood by all people involved.”
Just Group Group Communications Director Stephen Lowe said: “The majority of property wealth in the UK belongs to the over 55s and since the easing of pandemic restrictions there has been a strong rebound in the number of people looking for ways to access it. underpin their financial aspirations later in life.
“The ability to adapt plans to meet a wide range of requirements helps provide solutions that can meet each customer’s unique needs.
“Providers compete with a host of flexible features such as direct debit facilities, repayment options, inheritance protection, interest service and medically underwritten rates.”