Equity release 'seriously' affected by housing devaluation

Equity release has undergone a significant change owing to the highs and lows in the property market, according to new findings.

After the advent of the global economic downturn, equity values of properties have been damaged due to the fall in house prices, claims HSBC.

However, the rebound in housing prices in April last year assisted in helping to improve people's financial status, leveraging a breakthrough into a lower loan-to-value range. This also significantly increased the value of equity held by people in their homes.

Martijn van der Heijden, head of mortgages for HSBC, added: "Whether they have any intention to sell or not, rebuilding the equity in their homes is an essential element in gaining access to lower rates when they come to remortgage."

Another benefit of improving the equity on homes will be to help households plan for a comfortable retirement.

Equity release has been promoted by many experts as a reliable source of alternative income after giving up work.

Ashall Glover Financial Services are equity release specialists.