Over 50s consider downsizing or equity release to navigate cost-of-living crisis
More than half of people aged between 50 and 89 said they would be impacted “a lot” by the cost-of-living crisis, according to Livemore’s Barometer.
Consequently, raising money from releasing equity or downsizing was a top financial priority for 15% of the 2,041 respondents. For 80 to 89-year-olds, this rises to 27%.
More than half of respondents said they felt very negative about the state of the economy and nearly three quarters said there was not adequate support from the Government.
From a regional perspective, the North East, Northern Ireland and Scotland had the highest levels of dissatisfaction with Government support.
Livemore: ‘Flexible options for older borrowers’
LiveMore’s CEO, Leon Diamond, said people aged 50 to 90 plus were often portrayed as “financially comfortable” but the report showed the “truth is far more complex” across age ranges and regions.
He said the reality was that many aged between 50 and 90 plus “will have to make major financial decisions” about their homes.
“We are conditioned to avoid debt in older age, a concern which is exacerbated by high street banks making it difficult for older people to borrow.
“It is imperative that those seeking to release or generate extra cash get the right financial advice. There are flexible and affordable lending options for 50 to 90 plus year-olds. For example, LiveMore’s oldest borrower is 92,” Diamond added.
Equity release hit record high in 2022
Separate data from equity release adviser Key Later Life Finance revealed there was £5.58bn of new lending in 2022, a record high for the sector.
Once borrowing by existing customers had been taken into account (drawdown and further advances), total borrowing hit £6.3bn.
However, the market softened in the final quarter of last year as interest rates rose sharply off the back of the disastrous mini Budget and the number of products available shrank. Typically the last quarter is the strongest time of year.
Average rates were 5.7% at the end of 2022 compared with 3.07% at the end of 2021, while the average amount released was £106,806, a slight increase on the £104,792 average in 2021.
Key found around £3.3bn of property wealth across the year was used to repay debt as customers focused on strengthening finances amid rising interest rates.
Around half was used to pay existing mortgages while 38% was used to rebroke existing equity release plans. The remaining 12% were people paying off debt such as credit cards or loans.
Around 20% of customers used some or all of their property wealth to gift money to relatives.