News & press releases
Retirement won’t wait for house prices
‘When clients adopt a 15 year outlook, falling house prices are of little concern for equity release’
Hodge Lifetime, the UK’s longest established equity release provider, today urges IFAs to tackle clients’ concerns about falling house prices head on; encouraging clients to adopt a long term view and stop putting off retirement unnecessarily. Hodge Lifetime’s 15 year guaranteed draw down facility ensures clients will always be able to access the initial agreed amount, regardless of house price movement.
At a time when pension funds are restricted due to poor stock exchange performance and with the ABI reporting a 3.9% decline in the volume of pension annuity and drawdown premiums (Q3 2007 – Q3 2008)*, equity release remains a real alternative for funding retirement now.
Regardless of the current decline in house prices, clients must be made aware that it is the value of their property in future years, when the loan is repaid, that matters and not its present price assessment. During the 15 years between 1974 and 1989, when house prices slumped twice, the average property price from beginning to end still increased six fold from £10,208 (Q4 1974) to £61,495 (Q4 1989). And between 1989 and 2004, when house prices experienced one of their sharpest falls, property more than doubled in price (Q4 1989, £61,495 – Q4 2004, £152,464)**.
While house prices were reported to decrease by 1.7% between December 2008 and January 2009 (Nationwide House Price Index, Jan 2009), this will have little bearing on the eventual value of a client’s home in years to come and clients with Hodge Lifetime’s Flexible Mortgage Option and 15 year guaranteed draw down facility will always have access to their initially agreed loan amount regardless of monthly price changes.
Jon King, Managing Director of Hodge Lifetime, commented;
“Over the long term there will always be times when house prices drop and the market re-adjusts to periods of exuberance. It occurred in the mid 1970s, early 1990s and is happening today. However, these periods of readjustment are often in themselves short lived and should therefore not be cited as a reason for clients to defer from the long-term benefits of equity release.
“A client’s home is an appreciating asset and realistically provides a means to help fund retirement now. Those clients who can take a long term view of the market are well placed to embrace equity release and, with drawdown facilities and guarantees such as those offered by Hodge Lifetime, make use of a product that can help many older homeowners.”
Notes:
* ABI statistics – New Single Premium Decumulation Sales, Retirement Products
** Nationwide House Price Index – Quarterly average house prices (seasonally adjusted)
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