Over-55s turn to equity release to pay debts as inflation surges

OLDER homeowners have withdrawn more than £100,000 in wealth from their properties so far this year because of the cost of living crisis.

Over-55s are on track to borrow £6billion in 2022, resulting in a record first six months of the year, data from equity release adviser Key Later Life Finance show.

The number of equity release plan sales jumped by 25 per cent year on year while the value of equity released surged by 32 per cent in the first half of 2022 – both record highs. It follows equity release rates hitting a six-year high, above 5 per cent. Homeowners are increasingly using equity release to cover debt repayments as inflation destroys their spending power.

In the first six months of this year, 57 per cent of customers used some, or all, of their released property wealth to repay debts. In the same period last year, the share was just 53 per cent.

Across the first six months of this year, the average equity release customer took out £100,468 from their properties – £5,000 more than in 2021.

Equity release loans accrue compound interest each month, which means the size of the debt can snowball. The loans only have to be paid off when the homeowner dies or goes into care.

The South East accounted for the largest number of equity release plans, followed by the South West. Northern Ireland recorded the biggest year-onyear surge in plan sales, with a jump of 137 per cent.

Wales saw the second biggest rise in the value of equity released, up 73 per cent. It was followed by Scotland and

Yorkshire and the Humber, where the respective rises were 67 per cent and 50 per cent.

Will Hale, from Key Later Life Finance, said: “With the cost of living crisis very much at the forefront of people’s minds, we’ve seen a continued focus on the management of both secured and unsecured debt.”