Take-up of lifetime mortgages rose by 10% in 2004 is expected to grow further over the coming years, along with interest in single occupancy homes, says the Council of Mortgage Lenders.
Over 15,000 lifetime or equity release mortgages with a value of £693 million were sold in the second half of 2004, bringing the total value of the market for old homeowners to £4bn or 25 times the size it was 10 years ago.
That said, interest in equity release was not as rapid as the previous year – perhaps as a result of then pending mortgage regulation - as lifetime mortgage growth climbed 70% in 2003.
The CML points out research by the Institute of Actuaries also suggests people over the age of 65 years are thought to hold unmortgaged housing assets worth over £1 trillion.
According to its own findings, people in their 40s and 50s are more likely to consider using housing equity in their old age than those over the State retirement age so lifetime mortgage values could reach around £2bn a year within five years.
Statistics concerning the equity release also come just days after a report from the CML suggesting demand for property will also continue as the population is expected to expand by 10% over the next 30 years to 66 million, along with the number of households as the number of people in each home continues to decrease.
“Demographic trends suggest that the number of households is set to increase by more than the increase in the population over the next few decades, but growth will be unequal across the nations and regions,” says the CML report.
England currently holds the highest percentage of population in the UK at 84% of the total and is expected to grow by another 12%, Wales’ population will grow by 7%, Northern Ireland by 8% while Scotland, in contrast, has been declining for some time and will fall another 5% during that period.
The CML’s overview of the UK housing and mortgage markets suggests, in particular, affordability of property is worsening – the average property value is now reported to be £180,000 – and could increase as the current trend towards smaller properties will continue, albeit individuals looking to live alone would prefer to buy two-bedroom rather than one-bedroom properties.
The CML projects over one-third of households will be one-person households in 2021, having a major affect on the availability of property, as home ownership within 10 years is still the aspiration of at least 80% of people.
“These projections suggest significant implications for future household needs. While we might expect a future increase in demand for smaller properties, there is a common and growing aspiration to have at least one spare room. This means we are unlikely to see a significant increase in demand for one-bedroom properties.”IFAonline
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