House prices of older homeowners increase by £10,000 this year

Older homeowners have seen the value of their properties rise by more than £10,000 on average since the start of the year as house prices have remained high despite rising interest rates and the cost of living.

So far this year, the total property wealth of over-65s has risen by £101.5 billion to nearly £3 trillion, according to research by later-life lender Key.

This is worth an average of £10,121 for each homeowner who has paid off their mortgage.

The biggest gain per household over the year was in London, where homeowners are more than £16,000 better off, while in the South West the average profit just lags behind at £15,950.

As a region, the South West saw the largest total gains at £16.7 billion, ahead of the South East and London at £15.5 billion and £15.3 billion respectively.

The figures run from January to May this year; over the same period, the Halifax House Price Index registered a price increase of 4.5 percent, about £12,300.

The difference between the average increase for all homeowners and those over 65 may be due to the trend in those who have paid off their mortgages to phase out in later years.

Nearly 37 percent of the total housing wealth of over-65s is concentrated in the South East and London, although more older homeowners in East Anglia, the South West, the North West and the West Midlands own their homes than in the capital.

General house prices have continued to rise in the UK, defying increasingly turbulent economic conditions.

In August, the average house price rose to £294,260 according to Halifax. The figure means house prices have risen by an average of 6.5 percent so far this year, and an additional £18,000 since December.

However, there are signs of a slowdown. The annual growth rate for the year to August 2022 was at its lowest point in three months.

Will Hale, CEO of Key, said: “In the wake of the pandemic and the stamp duty holiday, the housing market was brisk as more people wanted to set their first foot on the real estate ladder or move from real estate.

“While there are signs of cooling off in the face of rising interest rates and the tight cost of living, older homeowners likely have significant equity in their homes.

“Choosing to use equity is a decision that should work for people over 65 now and in the future, but people need to know there are options available to help them pay the increasingly unsustainable energy and food bills if they own significant property.” live .

“People with low to moderate incomes or fixed incomes have been particularly hard hit by the recent price increases and with retirement incomes often lagging inflation, many older customers are really getting the hang of it.

“With stock prices rising and real estate prices uncertain, now is a good time for older homeowners to seek specialist advice and consider all their options.”

Equity release, also known as a lifetime mortgage, is when homeowners over the age of 55 take out a loan up to 60 percent of the value of their property.

This must then be repaid with interest in the event of death or long-term care. However, some products now make it possible to repay the interest on the loan or the loan itself annually during the term.

The number of new share release plans agreed in the second quarter of this year rose 26 percent year-on-year compared to the subdued market of the second quarter of 2021, when pandemic restrictions remained in place as more homeowners increase the value of their homes. to finance the cost of living.