*41 per cent more people took cash out of their homes in the last three months compared to previous three months.
UK homeowners are using their properties as a back-up savings account as the average amount of equity released in July hit a record £78,334, according to figures compiled by leading equity release provider Responsible Equity Release.
The equity release market shows little sign of slowing down, as homeowners turn to their properties to prop up savings accounts, pay off mortgages and cover pension deficits.
With the average UK salary just under £28,000, homeowners released equity from their homes totaling almost three times the average annual wage last month.
Responsible Equity Release figures also show that homeowners are taking advantage of innovation in the equity release sector to set up an additional borrowing facility which they can draw from if and when they need the money.
On average, homeowners arranged an additional £37,000 in funds as a drawdown facility, on top of the equity already released.
Over the past three months, 41 per cent more UK homeowners released equity from their homes than the previous three months. Last month saw a 158 per cent increase in the total amount of equity released, compared to July 2016. And the amount released in July 2017 was 10 per cent up on June 2017.
Regionally, the North East was the big mover in July, with three times much equity (203 per cent) released in total by homeowners compared to June. Scotland was next, with total amount of equity released by homeowners up 59 per cent in July compared to the previous month. Individually, North East homeowners released more than a third (37 per cent) more equity in July versus June; from £24,173 to £33,112.
London saw a 17 per cent rise in the total amount of equity released by homeowners in July compared to June, but the average amount released fell from a peak of £208,500 in June to £175,744 last month. That was probably due to the noticeable fall in house prices in the capital, which likely resulted in borrowers being more cautious about the amount of money they took out of their homes.
Steve Wilkie, managing director, Responsible Equity Release, comments:
“People, especially those in retirement, are increasingly turning to their homes as a back-up savings account. With no signs that the Bank of England are going to hike interest rates any time soon, this low interest rate environment has killed the savings hopes of many.
“Equity release has stepped up and established itself as a vital financial product for thousands of people who are approaching retirement or have retired, and are now relying on their savings and investments, but unfortunately the income these investments generate doesn’t match their needs.
“With the flexibility equity release now offers, such as the ability to drawdown from an additional borrowing facility, it is the one financial product that has adapted to meet the needs of the consumer.”