The Budget and House Prices Affect Equity Release
During the month of June the equity release market was once again affected by house prices, both positive and slightly negative based on different sources, whilst the “Emergency” Budget, announced by the coalition Government, also impacted on the equity release market.
Like most recent months, the equity release market was boosted by the announcement of further house price rises, with the Nationwide showing a 0.5% increase during the month of May.
This average increase in house prices will have been good news for potential equity release customers hoping to use the value in their homes to improve their lifestyles. This is a popular motivation to release equity, with 14.20% of Age Partnership customers citing this as the reason to take out a plan.
State Pensions and Housing Equity Growth
State pensions and having enough funds in retirement continues to be a major concern in the UK. With so many potentially affected, equity release continues to be mentioned as a suitable supplement to income.
During the middle of the month, it emerged that housing equity grew by another £2billion to take it to £767billion in the UK. This increase in housing equity led to suggestions that equity release should be considered to help with the pension deficit.
In an interesting study conducted by Aviva, financial planning and self esteem were linked, with those in control of their finances generally enjoying a better lifestyle.
The Budget Cuts Could Lead to More People to Use Equity Release
The announcement of the Budget saw VAT increases grab the headlines, with many over 55-year-olds likely to be affected. This led to Andrea Rozario, director general of Safe Home Income Plans (SHIP), claim that “equity release would seem like the logical answer to Government changes.”
Following the Budget announcement, the Government released details of their plans to bring forward the date when retirement ages will be pushed back.
As the month drew to a close, the Land Registry showed 0.1% decrease in house prices in the UK. However, despite the drop it suggested that the housing market is stabilising and year-on-year average valuations were up.
The month concluded with some research from Scottish Widows that suggested that less than 50% of people are saving enough for retirement.
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