Older homeowners pulled a record £1.7bn out of their properties in the last three months using equity release, data published yesterday revealed.
They are cashing in on high house prices this autumn to make ends meet as costs spiral, according to the Equity Release Council, which promotes the equity release sector.
More than 25,500 homeowners tapped into their property wealth in the three months to September, up 32 per cent from the same period last year.
Older homeowners pulled a record £1.7bn out of their properties in the last three months using equity release, data published yesterday revealed
Meanwhile, total lending is up 49 per cent year-on-year, with an average £133,770 drawn in lump sum lifetime mortgages.
Nearly £5bn has been drawn so far this year. But thousands could be locking themselves into expensive deals after the cost of borrowing rocketed.
The average person taking out £50,000 over 10 years must now pay an extra £21,606 in interest than they would have a month ago, analysts Defaqto calculated.
The average interest rate has increased 2.2 percentage points in the last month alone, to 8.29 per cent.
Rates have more than doubled over the last 18 months, when they were just 2.89 per cent.
Equity release lenders rushed to pull deals and increase interest rates following last month’s mini-Budget, in line with High Street mortgage lenders.
Katie Brain of Defaqto said: ‘Equity release can be a good way to release the money locked away within your property, however, with rates increasing the rolled-up interest is becoming much more expensive.’
Simon Gray, of specialist advice business HUB Financial Solutions, warned that there was a risk that older homeowners could rush into irreversible decisions as a result of kneejerk reactions to fast-changing financial circumstances.
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