More than £600bn of equity was available for release in UK homes in the final quarter of last year, breaking all previous records and up £15bn on the previous three months.
That is according to analysis by Canada Life – based on the latest Halifax quarterly regional house price index – which shows that the amount of housing equity available to homeowners aged over 55 now stands at around £600.5bn.
The surge in available equity has been driven by higher house prices across the South West, South East and London, potentially providing a new source of retirement income for households at a time of significant economic uncertainty.
“The world is changing around us and many homeowners are seeing an increasing strain on their personal finances,” said Alice Watson, head of marketing for insurance at Canada Life.
“In these cases, property wealth may serve as an important source of later life funding. The diverse nature of equity release products mean that they can be used to meet a range of evolving needs, while offering a combination of certainty and flexibility.”
The analysis shows that a property in London is now reaching an average price of £519,000, creating £117bn of potential equity for the region, or £153,199 per household – the largest available in the UK.
This is closely followed by the South East, which now has £116bn of potential equity, or £102,492 per household.
Property prices in the South West and in Wales witnessed the largest percentage growth in house prices in final quarter of 2020, growing by 3.6%.
A full regional breakdown of available equity is shown below:
“The substantial concentration of wealth in UK property and our increasingly competitive product loan-to-values (LTVs) means there’s now more equity available to release for those looking to access money from their home,” Watson said.
“As a result, equity release could play an even greater role in retirement as the over-55s look for financial security in later life.”
Image credit: iStock
Graphic credit: Canada Life
Author: Chris Seekings