Equity release borrowers using funds to support family through pandemic
Equity release advisers have reported that increasing numbers of clients are using the money to help family members, a survey from More 2 Life has found.
The study of 587 advisers found 53 per cent were seeing borrowers use equity release to help family members get on to the property ladder, potentially spurred on by the stamp duty holiday.
Meanwhile, a third reporting seeing more clients use the money to help relatives who were struggling financially.
Some 31 per cent of advisers said clients were using equity release to repay their residential mortgage while 27 per cent said the money was being used to refinance debt incurred since the pandemic.
As for how clients will use equity release going forward, 78 per cent expect clients to support their basic retirement needs over the next year with this kind of borrowing.
Decline in cases
Although advisers are seeing more clients use equity release as a means of financial support in response to the pandemic, 40 per cent said they were advising on fewer cases since the start of the Covid-19 crisis compared to usual business.
Some 34 per cent of advisers claimed to support more equity release cases since the pandemic while 26 per cent reported no change in activity.
Dave Harris, CEO at More 2 Life, said: “The later life lending market is facing an interesting conundrum – we’ve worked hard to educate people on the role that housing equity can play in retirement, but we are also aware that, now more than ever, we need to encourage people to avoid knee-jerk reactions and make smart sustainable choices for both the long and short term.
“What we need to do now as an industry is to ensure over-55s get high quality advice that helps them find the best solution for their specific needs – whether this involves an equity release mortgage or an alternative option.”