The value of equity release mortgage sales to people aged 60 and over has fallen by 48 per cent in the past year, research from Bowmore Financial Planning has revealed.
Bowmore found that, for the year ending October 31, the value of sales fell from £5.2bn in 2021/22 to £2.7bn in 2022/23.
It added that the value of equity release mortgages is now the lowest it has been in the past five years, having stood at £2.9bn in 2018/2019.
Bowmore Financial Planning CEO, Mark Incledon, said: “A lot of families have been using equity release mortgages in order to help fund their retirement, their grandchildren’s education or just to release an emergency lump sum of cash.
“The interest rates on this class of mortgages has made this route less affordable and less attractive.
“Many elderly homeowners have the majority of their wealth tied up in their homes, there are few alternatives for freeing up the cash they need.”
Bowmore Financial Planning said a recent review of later-life mortgages by the Financial Conduct Authority may have further contributed to this decline.
It explained the review found that many firms offering equity release were giving poor advice and misleading customers.
Incledon added: “The recent FCA report was quite damning and may well have exacerbated the slowdown in sales of equity release mortgages.
“With interest rates expected to come down over the next year, we should see lifetime mortgage providers offer more generous deals. If that happens, then lifetime mortgage sales should recover.
“If the trend continues however this could be very problematic for elderly borrowers with bills to pay.”
Lifetime mortgages are the most common type of equity release whereby homeowners borrow a lump sum against the value of a home they own.
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
