Older home owners are pulling a record £1.7billion out of their properties in three months, using equity release as a cost-of-living deal.
- In the three months to September, more than 25,500 homeowners took possession of the property, a 32% increase on the same period last year.
- Meanwhile, total lending is up 49 per cent on last year, with an average of £133,770 in single lifetime mortgages
Older home owners pulled a record £1.7bn out of their properties in the past three months through equity releases, figures released yesterday showed.
They are cashing in on high property prices this fall to make ends meet as costs rise, according to the Equity Issue Council, which promotes the equity issue sector.
In the three months to September, more than 25,500 homeowners took possession of the property, a 32% increase on the same period last year.
Older home owners pulled a record £1.7bn out of their properties in the past three months using equity release, figures released yesterday showed.
Meanwhile, total lending was up 49 per cent on last year, with an average of £133,770 taken out in single lifetime mortgages.
Almost £5 billion was raised this year. But thousands of people could be in for expensive deals after the cost of borrowing skyrockets.
The average person taking out £50,000 over 10 years now has to pay an extra £21,606 in interest than a month ago, analysts at Defaqto have calculated.
Only in the last month, the average interest rate increased by 2.2 percentage points and amounted to 8.29 percent.
Rates have more than doubled in the past 18 months from just 2.89 percent.
Equity-issuing lenders have rushed to close deals and raise interest rates after last month’s mini-budget, according to mortgage lenders on the High Street.
Defaqto’s Cathy Brain said: “Equity release can be a good way to free up money sitting in your property, but with rates rising, rolled-up interest is becoming much more expensive.”
Simon Gray of specialist advice HUB Financial Solutions warned there was a risk that older home owners could rush into irreversible decisions as a result of a knee-jerk reaction to rapidly changing financial circumstances.
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