Equity release could spur need for debt management solutions
Equity release could spur need for debt management solutions
Friday 1st May 2009
SHIP, the equity release provider trade body recently revealed that there was an increase in the average equity release loan size in the first quarter of the year compared to the same period last year.
The data showed there was a 16 per cent increase in the average sum released from properties as the figure rose to £48,287, up from £41,718 recorded in the first quarter of 2008.
According to Key Retirement Solutions, this is a concerning matter because it shows people are borrowing bigger percentages of their property's value in a period where property values have declined.
"Taking in excess of what is needed at a given time can be a very costly experience," warned Dean Mirfin, Key Retirement Solutions group director.
"We are concerned that consumers are borrowing higher levels against their homes, which have been falling in value, and that consumers are potentially being excluded from the savings which drawdown offers," he said.
Highlighting the advantages of drawdown, he said "consumers benefit from the fact that interest only accrues on the amounts which have been drawn which can result in savings of many thousands of pounds".
"Comprehensive and specific fact-finding is needed to reflect the range of solutions and consumer priorities," he added.
The latest figures from the Nationwide House Price Index show that last month homeowners continued to be plunged into debt as house values declined by 0.4 per cent.
News article brought to you by Debt1 – UK debt management specialists.
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