Property equity can deliver a valuable income, especially against the current backdrop of low interest rates and equity price falls of around 30% over the past two years which have hit many pensioners’ non-pension savings.
Prudential’s Index, which tracks the amount of home equity owned by people aged 65 and over in England and Wales, found that 42.5% of this equity belongs to those living in London and the South East.
The Index also reveals that the value of property equity belonging to homeowners aged 65 and over fell by £80.6billion between October 2008 and January 2009, with the average homeowner over 65 seeing the value of equity they have in their home fall by £21,377.
London homeowners aged 65 and over saw the highest decline for any region in England and Wales with equity in their homes falling by £38,057 while those in Yorkshire and Humberside experienced a decrease in value of £13,028.
Keith Haggart, Director of Lifetime Mortgages at Prudential, said: "Every homeowner is being affected by falling property prices, but it’s important to remember that many people, especially retired homeowners, bought their homes years ago and have benefited from past growth in the housing market. Even in this depressed market, the vast majority of retired homeowners still have considerable wealth tied up in their properties.
"Equity release has an important role to play in providing retirement income particularly when other sources are under pressure.
"Annual figures from SHIP (Safe Home Income Plans) show that equity release sales in 2008 were almost £1.1billion and were just 9% lower than 2007, despite the collapse in the wider mortgage market."
Have your say on this story using the comment section below