Older savers forced to look for alternative ways of generating income have turned to equity release to boost their savings.As they are more likely to save, the older generation has been hit the hardest by the declining interest rates. Lowering to 0.25% after last June’s referendum result, older savers have had to find other ways of bolstering their savings, especially during times of high inflation.
David Bridge, co-founder of Equishield said: “We are finding that many retirees are remaining active for longer. As such, they want to maintain a way of life that they have earned and enjoy their retirement, but they may find that their pension and savings are no longer delivering the returns anticipated in this new world of low interest rates and increasing inflation.”
One of the key ways that pensioners have sought to get around these issues is through equity release.
Rather than having to release cash through downsizing, equity release enables retirees to unlock property wealth gradually, with the repayments of the capital sum being repaid upon death.
“They [retirees] find that they are perhaps sitting on a considerable asset in their home which, if properly advised and carefully considered, can now be made to work for them without having to sell or downsize and support their choices,” commented David.
The popularity of equity release in recent months, especially from older savers, has been reflected in the number of available products on the market. According to research by Moneyfacts, the number of fixed equity release options has grown to an eight-year high of 82, rising from 52 in 2015.
“In the bad old days, equity release was a fairly blunt instrument with a poor reputation – delivering unexpected and often disadvantageous results,” says David.
“The market has matured along with its target audience and equally become more sophisticated – again along with its target audience. Demand leads to innovation and coupled with careful regulation, this has led to new products that address what clients potentially want and that they are willing to take up to protect their active retirement in a way that suits them and allows them to retain the house and lifestyle that they worked hard to obtain in the first place.”
Finance expert at Moneyfacts, Rachel Springall commented on the increase in product choice and the wider range of options available to consumers. In order to avoid a shortfall in retirement income, she stated unlocking wealth through equity release could be an effective way to top-up savings.
A joint project between several regional law firms, Equishield provide professional legal advice for Equity Release Mortgages across England and Wales. More information can be found on their website.
