News: Baby-boomers losing housing equity across the UK

Thu, 31 Mar 11

Falling home prices have caused homeowners at retirement age to lose a collective £18.4bn in the past three months, Key Retirement Solutions has warned.

Dean Mirfin, group director of Key Retirement Solutions, said this amounts to £4290 for each homeowner aged over 65.

The biggest losers were over-65 homeowners in Scotland, where average losses were £8720, while retired homeowners in the north-east were £7058 worse off after house price falls, according to the statistics.

Only over-65 homeowners in London escaped the property market slide with housing equity virtually unchanged.

Key Retirement's figures show almost a third of property equity is owned by pensioners in London and the South East of England. In London over-65s own property without any mortgages worth a total of £124.4bn while in the South East pensioners own £121bn of property without mortgages.

Mr Mirfin said: "The housing market remains in the doldrums and the average losses of £4290 this year are, on paper, a major blow.

"But despite current volatility, it is clear the over-65s own considerable property wealth, which still represents a massive investment success as they no longer have mortgages and will, in most cases, have bought more than 25 years ago.

"The equity release market saw a rise in the number of plans sold in 2010 with more pensioners opting for drawdown products, which enable them to benefit from lower borrowing costs today, allowing for increased flexibility to access further funds over time as and when required."

Source: FT Adviser.com

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