Over 2.5 million over 55 year olds are planning to release money from their home by selling their property over the next 12 months. As a result, £89 billion is expected to be moved into savings accounts, new research from Ford Money has revealed.
The research found that more than one in 10 (13%) of those over 55 are planning to release money from their home by downsizing or moving to a cheaper location within the next 12 months. In addition to this, a further 8% are planning to move home over the next five years.
Ford Money also found that those planning to sell this year are expected to receive £85,250 each, with the majority planning to save an average of 52% of the released money, £44,330 each, for an average of six years.
Commenting on the research, Suzanne Lewsley, chief deposits officer at Ford Money, said: “Many over 55s are asset rich but cash poor, so it’s unsurprising that as the property market shows signs of heating up again, this group is looking to release the wealth trapped in their homes to bolster savings.
“But regardless of who or what it’s being saved for, it’s important they are depositing their newfound savings in the right place. Cash savings are a sensible, low risk investment option for people nearing retirement but, with over 55s planning on hoarding their equity for a little over 6 years, they need to ensure they aren’t only choosing the right type of product, but also the best possible rate for the long term, so that they can grow their money further.”
Savers looking to put their money into a savings account for a maximum term of six years will find that Gatehouse Bank is currently offering the best rate. Gatehouse Bank offers an expected profit rate of 2.10% gross on both its Fixed Term Deposit and Raisin UK – 5 Year Fixed Term Deposit accounts, both of which require a minimum opening deposit of £1,000. Fixed Term Deposit pays expected profit on anniversary and can only be opened and managed online. Raisin UK – 5 Year Fixed Term Deposit pays expected profit on maturity and can only be opened online, but can then be managed online, by post and by phone.
The next best rate comes from Aldermore which pays 2.00% gross on anniversary on its 5 Year Fixed Rate Account. This account requires an opening minimum deposit of £1,000 and can only be opened and managed online. There is also a version of this account that pays interest monthly at a slightly lower gross rate, but which provides a good option for those looking to supplement their income. Bank of London and The Middle East (BLME) pays an expected profit rate of 2.00% gross on anniversary on the five year version of its Premier Deposit Account. This account also requires a minimum opening deposit of £1,000. It can only be opened online but can then be managed by post.
Barclays Bank is offering one of the best rates on a fixed rate ISA with a term of just three years. Its 3-Year Flexible Cash ISA – Issue 26 pays 1.70% gross on maturity and requires a minimum opening deposit of just £1. This ISA can be opened and managed online, in branch, by phone and mobile app. It also offers a version that pays interest monthly at the same gross rate. Principality Building Society also offers 1.70% gross on anniversary on its 5 Year Fixed Rate Cash ISA Issue 218. This ISA has a five year term and requires an opening minimum deposit of £500. It can be opened online and in branch and then managed online, in branch and by post. There is also a version of this ISA that pays interest monthly but at a slightly lower gross rate.
The next best long term fixed ISA rate comes from Hodge Bank, which pays 1.65% gross yearly on its 5 Year Fixed Rate Cash ISA. This ISA requires a minimum opening deposit of £1,000 and can be opened online and by post, then managed by post and phone. It also offers a version that pays interest monthly at a slightly lower gross rate.
According to the research by Ford Money 44% of over 55 year olds are planning to put the money released through property in a notice account. Savers looking at a notice account will find that the account offering the top rate without any opening restrictions comes from ICICI Bank UK. It offers a rate of 1.59% gross monthly on its HiSAVE Notice Savings Account and its Raisin UK – 95 Day Notice Account. HiSAVE Notice Savings Account requires a minimum deposit of £1 to open and can be opened and managed online, in branch and by phone. Raisin UK – 95 Day Notice Account requires a minimum opening deposit of £1,000, but can only be opened online. Once opened it can be managed online, in branch and by phone. Withdrawal of full account balance is subject to 95 days notice and account closure with no partial withdrawals allowed.
Savings of up to £85,000 are protected by the Depositor Protection Scheme. For more information about how your money is protect take a look at our guide on Depositor protection schemes.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.