The use of equity release by pensioner households could increase by a third in 21 years, a report published by the Pensions Policy Institute, commissioned by Prudential has revealed.
According to the study, housing wealth could play a greater role in supporting retirement in the future, as equity release could help to supplement retirement income, in addition to reducing living costs.
In fact, Nick Cleal, PPI director claims: "This research shows that if the current demographic and homeownership trends continue, the number of households where the head is aged over State Pension Age with higher value housing wealth which could be used to release equity to support retirement – whether by downsizing or using commercial equity release products – could increase by a third, to 5.2 million households by 2030."
Nevertheless, Mr Cleal notes that there may still be barriers between those with housing wealth, and the use of equity release, he adds: "There may still be a number of barriers to the use of housing wealth to support retirement: many people are emotionally attached to the family home or may wish to leave the home as a bequest.
"Pensioners may also be concerned about the costs and risks of releasing housing equity," he adds.
The report highlights the fact that, during retirement, income needs change as the retired spend more money on travel and leisure, Keith Haggart, Prudential's director of lifetime mortgages adds:
"However, for most people their income is fixed or rises only in line with inflation. This report shows that the real benefit of equity release is it allows customers to supplement their retirement income to match their individual needs."
Click to learn more about equity release »
© Fair Investment Company Ltd