Prudential Equity Release Index reveals £611 billion equity
in homes owned by over 65s
on: May 7, 2009, 8:42 am
has revealed findings from its latest Equity Release Index* which
show that despite falling house prices and the current economic
climate, homeowners aged 65 and over have £611.5 of equity
in their property.
significant amounts of property equity contrast with the current
squeeze on retirement income being seen in today's volatile market
and economic conditions where rates on annuity and income drawdown
products are falling.
buying guaranteed annuities, for example, have seen rates fall
by up to 10 per cent since the middle of last year and Prudential
believes this fall emphasises the need for pensioners to look
at all potential sources of investments and retirement income.
equity can deliver a valuable income, especially against the current
backdrop of low interest rates and equity price falls of around
30 per cent over the past two years which have hit many pensioners'
Index, which tracks the amount of home
equity owned by people aged 65 and over in England and Wales,
found that 42.5 per cent of this equity belongs to those living
in London and the South East.
Index also reveals that the value of property equity belonging
to homeowners aged 65 and over fell by £80.6 billion between
October 2008 and January 2009, with the average homeowner over
65 seeing the value of equity they have in their home fall by
homeowners aged 65 and over saw the highest decline for any region
in England and Wales with equity in their homes falling by £38,057
while those in Yorkshire and Humberside experienced a decrease
in value of £13,028.
Haggart, Director of Lifetime Mortgages at Prudential, said: "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 past growth
in the housing market. Even in this depressed market, the vast
majority of retired homeowners still have considerable wealth
tied up in their properties."
release has an important role to play in providing retirement
income particularly when other sources are under pressure.
figures from SHIP (Safe Home Income Plans) show that equity release
sales in 2008 were almost £1.1 billion and were just nine
per cent lower than 2007, despite the collapse in the wider mortgage
release schemes can be an excellent way to help retirees to secure
an income, and any provider who is SHIP registered provides a
no-negative equity guarantee as well as guaranteeing that the
mortgage interest rate is fixed for the term of the loan.
Prudential's Equity Release index tracks the amount of equity
held in property by people over 65 years old in England and Wales.
Figures are based on Prudential's analysis of data from the ONS
Family Spending Report (2006), the Land Registry House Price Index
(August 2008) and GfK NOP (2007). Specifically, weighted number
of households data is taken from the ONS Family Spending Report
2006. Home ownership data is taken from the NOP data. Average
house price per region is taken from the Land Registry Index.
"Prudential" is a trading name of The Prudential Assurance
Company Limited, registered in England and Wales. This name is
also used by other companies within the Prudential Group. Registered
Office at Laurence Pountney Hill, London EC4R 0HH. Registered
number 15454. Authorised and regulated by the Financial Services
out more on Prudential’s product range including endowments
release schemes, including equity
release mortgages on the Prudential website, www.pru.co.uk.
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