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Financial Times equity release

ended 20. February 2023

A journalist at the FT is keen to know whether more HNWs are resorting to equity release amid the cost of living crisis, e.g. are you seeing a slightly wealthier demographic using it more so than in the past? If so, what are these people typically using it for? More broadly, she's after any trends you're seeing (and any anecdotes) specifically relating to higher net worths and equity release.

3 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Clients who have significant property but little liquid cash tend to be those who use equity release, and with inflation hitting bills we have seen an increase in these cases as homeowners need more income to heat their homes. Most high-net-worth clients tend to use equity release as a tool for inheritance tax planning and we have seen a significant increase here too. Advisers can do clever things with cash to squirrel it away from the tax man, but the property is difficult to shelter from IHT. Equity release allows you to create a debt on the property, whilst gifting this money to children to help them get on the housing ladder or if they need help during a cost of living crisis. Clients like to see the benefit of their legacy whilst they are still living.
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Gareth Davies
Director at South Coast Mortgage Services
We've actually seen a drop-off in HNW considering equity release in the last 12 months, and we've seen an increase in people 'needing' to consider it due to the financial pinch brought about by the cost of living increases. Prior to 2022 interest rates were incredibly low for equity release, and we saw more people choosing to use the equity in their home as opposed to investments they had, as the investments at the time were giving them a much better return than they would pay in interest on the mortgage. The cash released was being used for things they 'wanted' as opposed to 'needed'. Luxury holidays, significant home improvements, camper-vans to travel the UK in, all manner of reasons. When timed well, equity release is a great tool to utilise for financial planning in later life.
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Mark Stallard
Director and Advisor at House and Holiday Home Mortgages
There is a definite shift in mindset. Later life borrowing is forming part of estate planning more than ever before; we're seeing evidence of HNW borrowers using their properties to help family members. It's no longer just seen as lending of last resort.

Reasons do remain varied though, with one customer spending a substantial amount of money making their property greener and more energy efficient.