Financial security of many Irish Seniors doubles over the past 10 years

New study reveals the financial security blanket of Ireland’s ageing population as findings highlight that many have an average of 27times the annual State pension wrapped up in their own homes

With average property values now running at approximately 27 timesannual State pension incomes, Irish pensioners are in a prime position to benefit from the increase in property prices that Ireland has experienced in the last 10 years. In fact, retirees in Ireland are in a much better position than many of their global counterparts since property prices here have risen at a much higher rate than many other countries.

The innovative study, undertaken by Seniors Money, looked at the relationship between property values and the State pension, and found thatretirees in Ireland are significantly better off than they were a decade ago. The typical retiree in Ireland has an additional 27years worth of state pension tied up in their home– so their financial security has evidently strengthened over the last ten years when seniors only had, on average, approximately 15times the annual State pension wrapped up in their homes.Findings from the study show that seniors in Irelandhave never been better placed to look to their homestead and utilise a small element of their equity to boost retirement income. Pensioners can now take some comfort in the knowledge that their retirement need not have to be the cause of financial worry. It would appear that more and more people are realizing this new found financial security and using this excess equity as a tool, with which to boost their pension income and allow them to enjoy a comfortable retirement.

Peter Mitchell, CEO of Seniors MoneyIreland, commented, “Although there has been much commentary of late, on the recent cooling in the Irish property market, this does not negate the huge increases Irish property values have experienced over the last decade. And while lobbyists have urged the government to substantially increase pension provision, it is unlikely that we will see radical reforms of State pension in the near future. The results from Seniors Money’s latest Index would indicate that increasing numbers of Ireland’s ageing population are now choosing to boost their pension income by availing of the consequences of the Irish property boom. A lack of adequate pension provision coupled with an ageing population and a high rate of home ownership appear to underpin the demand for lifetime mortgages, which is expected to grow strongly over the medium-long term”.

12 months on from the last Index released by the market leader, figures from the Seniors Money 2007 Index, have highlighted significant increases across the board when it comes to this post retirement financial option. The Index tracks consumer activity within this post retirement finance market and as Seniors Money is the leading specialist in this sector; its experiences tend to mirror general market activity.

H1 2006 / H1 2007 / Difference
Typical Approval Amount / €80,000 / €120,000 / 50%
Typical Loan / €56,000 / €68,000 / 21%

It has been a tumultuous year for the Lifetime Mortgage market which has received much press coverage over the last twelve months; however demand for this post retirement financial solution has gone from strength to strength as consumers become more aware of the benefits of this financial option and of the relatively small amounts that can be drawn-down.

Big increases evidenced by the Index results included:

-Loan approval amount has increased by over 50% since the first half of 2006

-The Irish take a very cautious approach and although the average loan amount rose, up 21%, it did not reflect the steep rise in the average approval amount.

-In 2007 those who took a Lifetime Mortgage only drew down an average of 11% of the value of their home

Peter, went on to comment “What can be surmised from the results of the Index is that our clients are using the Lifetime Mortgage for the exact purpose it was intended for- as a financial tool with which to supplement their current income to allow them to maintain a reasonable standard of living . We believe the findings are extremely positive as they reinforce the fact that those over 60 approach this financial decision in the prudent manner which we advise. They are not drawing down the maximum possible; instead they only take what they need- therefore, cutting down on the amount of interest accrued and leaving plenty of equity in their property for the future.”

Regional ranking

The study highlighted that the seniors that are in the position to benefit most from the sharp increase Irish property prices have experience in the last ten years, hail from the following counties:

-Dublin seniors top the poll with an average of 39 times the annual State pension tied up in their home. This is almost twice as better off as they were ten years ago when they had just 19 years worth of State pension in their home.

-Wicklow came a close second. Retirees here can take solace in the knowledge that they have an average of 36 times the State pension in the home equity and are twice as better off as the were in 1996 when their property equated to only 17 times the annual State pension.

-CorkCity, took third place. Seniors on this county will be glad to hear that they have an average of 32 times the annual State pension tied up in their homes.

-

Other findings from the Seniors Money 2007 Index included:

-Home improvements have topped the poll with 58% of customers choosing to reinvest their money in their home.

-Debt consolidation remained a distant second on the list of possible uses for the money released from a Lifetime Mortgage- with only a quarter of borrowers citing this as a potential use.

-Extra income was the third most popular choice amongst those who took out a Lifetime Mortgage. Over a fifth of applicants (22%) said the facility of supplementing their income was one of the primary reasons for choosing to use their home as a financial tool.

Commentators suggest that the number of people aged over 65 is set to treble to 1.5 million over the next 20years as the younger population remains static. Therefore, it is easy to see how financial planning in retirement is increasingly moving up in position on the public agenda.

ENDS

Note to editor:

Seniors Money Ireland is Ireland’s leading specialist in Lifetime Mortgages. The company was launched in January 2006 with the specific aim of bringing Irish seniors the very best features of a retirement lifestyle enhancement concept known as the Lifetime Mortgage.

Regional Variations Chart

Av Prop Val 2006* / Times AnnualState Pension / Av Prop Val 1996* / Times AnnualState Pension
Dublin (city & county) / 427343 / 39 / 92342 / 19
Wicklow / 388827 / 36 / 84763 / 17
Cork / 348806 / 32 / 76,855 / 16
CorkCounty / 317973 / 29 / 73114 / 15
Kildare / 337757 / 31 / 80371 / 16
Meath / 336959 / 31 / 86152 / 17
Galway / 314801 / 29 / 92588 / 19
Louth / 303533 / 28 / 66753 / 13
Wexford / 289128 / 27 / 65953 / 13
Kilkenny / 288554 / 27 / 72218 / 15
Monaghan / 285798 / 26 / 83813 / 17
Westmeath / 284036 / 26 / 67922 / 14
Waterford / 271324 / 25 / 64609 / 13
Kerry / 270492 / 25 / 67874 / 14
Clare / 263883 / 24 / 69330 / 14
Cavan / 262954 / 24 / 67626 / 14
Offaly / 262484 / 24 / 61146 / 12
Leitrim / 257816 / 24 / 66077 / 13
Sligo / 256602 / 24 / 75801 / 15
Laois / 256340 / 24 / 57090 / 12
Limerick / 254557 / 23 / 72940 / 15
Carlow / 253908 / 23 / 61041 / 12
Roscommon / 247087 / 23 / 75129 / 15
Mayo / 246460 / 23 / 69838 / 14
Tipperary / 246094 / 23 / 57006 / 12
Longford / 230096 / 21 / 67986 / 14
Donegal / 223237 / 21 / 61463 / 12

* Source: PTSB ESRI House Price Index

For further information about the Seniors Money Lifetime Loan, please call 1800 75 75 78 or visit