The over 65s are sitting on a goldmine, with £611billion of equity in their homes which could be unlocked with equity release, according to Prudential.
Prudential's Equity Release Index has revealed that homeowners aged 65 and over still have more than £611.5billion or equity in their properties, despite the recent fall in house prices.
Prudential highlights the disparity between the significant amount of equity which people of pension age have in their homes, compared to the current squeeze on pensioners' incomes as interest rates and the current economic climate takes their toll on returns from their investments and life savings.
Rates on pension annuities and income drawdown products have been falling, with individuals holding guaranteed annuities seeing the rates fall by as much as 10 per cent since mid-2008.
Prudential believes that this fall in pensioners' incomes emphasises the need for homeowners to look towards other potential sources of income, such as equity release.
Using the equity tied up in their homes can provide a valuable income, Prudential says, especially in current financial conditions.
Property belonging to those aged 65 or older fell in value by £80.6billion between October last year and January 2009, as the average over 65 homeowner's property lost £21,377 of equity.
But, the Prudential equity release reflects that there is still a significant amount of equity left in property belonging to the over 65s.
"Every homeowner is being affected by falling property prices, but it's important to remember that many people, especially retired homeowners, bought their homes years ago and have benefited from growth in the housing market," said Keith Haggart, director of lifetime mortgages at Prudential.
"Even in this depressed market, the vast majority of retired homeowners still have considerable wealth tied up in their properties."
Mr Haggart recognises that many people will not want to move home, and that the current market of falling house prices does not encourage people to sell, so he suggests that homeowners consider equity release, which, he says, "has an important role to play in providing retirement income particularly when other sources are under pressure."
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