Homeowners aged 65 and over still have equity in their homes

Despite falling house prices, homeowners aged 65 and over still have £692.06 billion of equity in their homes, according to findings from Prudential's Equity Release Index.

Prudential's Index, which tracks the amount of equity held in the properties of people aged 65 and over in England and Wales, found that 42.45 per cent of this equity belongs to those living in London and the South East.

Prudential's Index reveals that the value of property equity belonging to homeowners aged 65 and over fell by £34.37 billion between May 2008 and August 2008, with the average homeowner aged over 65 seeing the value of equity they have in their home fall by £9,119. Homeowners in London, aged 65 and over, saw the highest decline for any region in England and Wales with equity in their homes falling by £18,094.

Keith Haggart, Director of Lifetime Mortgages, at Prudential said: "Every homeowner is being affected by falling property prices, but it's important to remember that many people, especially retired homeowners, bought their homes years ago and have benefited from growth in the housing market. Even in this falling market, the vast majority of retired homeowners still have considerable wealth tied-up in their properties.

"Despite the recent falling costs of petrol, retired Britain has the highest rate of inflation and still faces a significant rise in the cost of living. For these reasons, more people are looking to release equity from their homes to maintain or improve their standard of living in retirement. "

Equity release schemes can be an excellent way to help retirees to secure an income, and any provider who is SHIP registered provides a no-negative equity guarantee as well as guaranteeing that the mortgage interest rate is fixed for the term of the loan.

Keith Haggart continues: "Equity release should no longer be seen as a product of last resort. Recent figures from SHIP show that equity release business has increased by £60 million since the first quarter of 2008.