Government backing for equity release expected to continue

According to Claire Barker, chairman of the Equity Release Solicitors’ Alliance (ERSA), the new coalition government appears likely to maintain its interest in equity release options for older homeowners.

Ms Barker told Mortgage Strategy that the coalition has committed itself to reforming public sector pensions and has established an independent commission to review their long-term sustainability and affordability.

She claims pensions will be cut considerably as a result of the reforms, leaving public sector employees with three options. The first is to delay retirement and the second is to accept lower accrual rate.

However, a third, potentially more viable option, is equity release. Equity release products allow older homeowners to remain in their homes while releasing equity so they are able to live comfortably.

“Political conditions seem to be favourable for continuing strength in the equity release market,” Ms Barker says. “With cuts affecting the pensions of 20% of the workforce, the equity release market could soon become a central pillar of retirement funding.”