The popular belief that equity release damages the housing market is being challenged by claims from ER company Retirement Advantage.
It claims there has been “a striking increase” in the proportion of its customers who are using equity release to buy a new property - and the company suggests this could be buy to let.
According to Retirement Advantage, the findings illustrate a growing willingness among over-55s to use property wealth more widely than in the past.
It claims that in the second quarter of this year, one in 10 customers took out an equity release loan in order to fund a new property purchase. This compares to 6.6 per cent who used equity release for this reason in 2017.
In addition, 14.1 per cent of customers used equity release to buy a car last quarter (compared to 9.9 per cent in 2017) and nearly one in four used some ER funds to go on holiday.
“We’ve seen plenty of headlines suggesting the property market has slowed in recent months. Not for over-55s, it seems. For this cohort, our figures suggest they are increasingly keen to make property purchases” says Alice Watson, head of product and marketing at Retirement Advantage.
“It is unlikely this is down to a wave of downsizing. We know from research we conducted earlier this year downsizing is not popular – only one in five older people say they’re prepared to consider it” she says.
“Instead, the increase suggests that the attraction of property as a long-term investment endures. For over-55s keen to own new property, wealth tied up in their existing home can make a significant financial contribution” Watson adds.
“Using existing property wealth in this way also offers further evidence that equity release customers today are proactively using the products to make major financial decisions. This reinforces the rapid maturity across this booming sector.”