Equity release emerges as a lifeline for retirees amidst cost-of-living crisis – report

A report from Mortgage Advice Bureau (MAB) indicates that equity release has become a method for pensioners to make room for a more comfortable later life.

In light of this, Senior Capital has commissioned a landmark national research report analysing into the dire landscape faced by the nation’s retirees. The study found a staggering 1-in-5 homeowners over the age of 55 stated they’re actively planning to sell their home with the purpose of downsizing as a result of the cost of living crisis.

Further highlighting this trend, 21% of respondents between the age of 55-64 say their mortgage places the biggest strain on their mental health. The study unveils the key concerns for the UK’s ageing population, when focusing purely on retirees, the study revealed a significant 64% of respondents now say one of their biggest stresses is the impact of the cost-of-living crisis on their savings and pension.

Rudy Khaitan, Managing Partner of Senior Capital discusses the alternative routes pensioners and the ageing population can take to improve their financial situation and help mitigate the impacts of the cost-of-living crisis on their mental health.

Khaitan explained that equity releases – amongst other lending products – are growing at pace to help pensioners access hundreds of thousands of pounds in capital which is currently frozen in their home. In addition to enhancing their quality of life through a much-needed cash injection, pensioners have also been able to utilise their asset wealth by supporting their children step on the housing ladder amidst a period when the average two-year fixed mortgage rate has almost topped 7%.

The average pension pot currently stands at just £107,300, according to the Office of National Statistics (ONS), indicating a lack of sufficient savings for a comfortable retirement. This has led to the Equity Release Council revealing a 23% year-on-year increase in people turning to equity release – a financial service allowing homeowners to access capital tied up in their home without selling it – as a vital lifeline amidst the cost-of-living crisis.

Khaitan, commented:

“This particular financial product is not just a tool for pensioners to enhance their own lives, it’s also a way to transfer wealth to the next generation. By unlocking the value tied up in their homes, parents and grandparents can provide their family members with life changing capital that could fast track their path onto the property ladder, or as seed capital for them to pursue their professional or entrepreneurial aspirations. Equity release is about more than immediate financial relief, it provides a means to shape a brighter future for families across the UK, helping them achieve their dreams of ultimate financial stability.

Equity release is more than a financial tool; it’s a lifeline for pensioners who find themselves caught in the grip of a cost of living crisis. It’s about giving them the freedom to unlock the wealth they’ve built up in their homes, and providing them with the means to live with dignity and security in their golden years. In a world where the costs of everyday essentials are soaring and traditional forms of retirement income can’t keep up, equity release can be a vital support, ensuring that the senior members of our society can enjoy the quality of life they’ve worked so hard to achieve.”

Read more stories

Join nearly 5,000 other practitioners – sign up to our free newsletter

You’ll receive the latest updates, analysis, and best practice straight to your inbox.