28th September 2015
Most of my equity release customers have enjoyed good success in the housing market. Property has increased in value at a tremendous rate over the past four decades, and house prices are forecast to continue their upward climb for years to come. However, for the younger generation, things are very different, with the property price increase outstripping earnings to such an extent that the housing ladder is being repeatedly pulled up and out of their reach.
According to recent research by Shelter, in April, in the entirety of Greater London, there were only 43 homes that were ‘affordable’ for the typical young family. That is a staggering statistic – only 43 affordable homes in a city of over eight million residents! Outside London, less than one in five homes on the market was judged to be ‘affordable’, a situation that is somewhat less acute than in the capital but still hardly ideal.
This generational difference is one of the main reasons for the growth of the Bank of Mum and Dad, with thousands of first-time buyers now relying on large loans or gifts from their family to have a chance of becoming a homeowner. Reports estimate an average of between £18,000 and £23,000 being loaned from parents to children.
But, with withdrawals from the family vaults increasing in frequency and value, The Bank of Mum, Dad, Grandpa and Grandma will not last forever, and many of the older generations will need to find different ways to fund their support for children and grandchildren.
“Helping family members” or ‘”providing an early inheritance” is one of the top three or four reasons that people use equity release to tap into their housing wealth. Indeed, with over a trillion pounds of housing wealth at the disposal of homeowners in their sixties, it is not surprising that many are looking into equity release as a means of assisting their family members.
If you have any questions about the subject matter of this blog, or would like more information on any equity release related point, please do not hesitate to contact me in any of ways highlighted on this website.
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