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Equity release levels continue to dry up

Equity release levels continue to dry up

Category: Retirement

Updated: 12/12/2012
First Published: 04/07/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

People concentrated on paying down their mortgages rather than take money from their homes in the first three months of 2011.

Figures from the Bank of England show that consumers increased their holdings in their properties by a combined £5.8 billion from January to March.

It continues a trend that saw a record breaking figure of £7.1 billion in the previous quarter.

The figures confirm that people are looking to increase their stakes in their homes, rather than taking equity out.

It is a turnaround from the years when house prices in the UK were booming.

The period 1998 to 2008 saw people take advantage of the rising value of their properties to purchase big ticket items, holidays and new cars.

But with the economic picture still very much uncertain, as well as a morose housing market, people are less keen to take money from their homes.

In a recent paper released by the Bank, it said that the reversal had been the result of a number of factors at the cheaper end of the property market.

Figures show that the number of houses sold has fallen below half of that seen previously, having an effect on equity release.

"The net effect of a chain of housing transactions is typically a large equity withdrawal," said the report.

"The fall in the number of housing transactions is therefore likely to have been a key driver of the fall in equity withdrawal since the financial crisis.

"There is little sign that, at the aggregate level, households are making an active effort to pay down debt more quickly than in the past."

It added: "Fewer homeowners trading down and selling a property without buying another mean that a large source of equity withdrawal has disappeared."

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