The latest drop in bank base rate has meant that savings accounts are paying out very little to elderly people who need the interest to survive – meaning equity release demand is on the rise.

Equity release is a form of secured lending where an elderly person's home's equity is released so as they can enjoy their lives and clear their debts later on in life. Many elderly people own most of or all of their homes so equity release has the potential to unlock trillions of pounds all over the UK.

David Cooper, marketing and distribution director at Just Retirement says: "The latest news of a further reduction in the base rate will hurt retired people living off their savings. The extent and speed of rate reductions since August may have defeated attempts at planning and left pensioners struggling to cope with a rapid reduction in income from their savings, especially once tax is taken into account.

"Simultaneous with loss of income, the newspapers report that food price inflation has risen to 9% for the 12 months to the end of February despite significant falls in the general level of inflation.

"Taken together these two factors could significantly damage the standard of living of pensioners who will now be seeking alternative methods to generate income from their assets. In many instances they may be forced to spend capital, thus harming their ability to return to normal even when interest rates eventually rise again. Equity release may be able to restore income levels either for those whose assets are already depleted or, when the time is right, those who could be left with insufficient funds over a period of time."

If you think its time to unlock some of your home's potential, talk to a mortgage adviser about what you can do.

SOURCE: Just Retirement, 06/03/09

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