Homeowners could end up £326,000 wealthier over a 30-year period than people who rent, before potential house price growth is even considered, according to a new report.
The Equity Release Council, which represents the UK equity release sector, found that nearly one in three homeowners see their mortgage as being like an investment in their future.
And nearly half of homeowners with a mortgage agree they are able to save more because their loan is cheaper than renting, due to unprecedented low interest rates.
Around 40% added they believe having a mortgage in later life is becoming more acceptable and 57% said they are looking at ways to release equity from their properties.
Details were published in a report, Home Advantage: intergenerational perspectives on property wealth in later life, which examined trends that have altered the financial landscape for pensions and homeownership over the past three decades.
Homeownership is expected to become more critical to families’ financial security and wellbeing in later life, but the report also warned of lifelong inequality for those unable to get onto the property ladder.
Younger generations will continue to struggle compared with older generations with building up big enough deposits to get onto the housing ladder, it said.
The council also said it would be challenging for them to build up savings for retirement.
The end of final salary pension schemes is a significant factor, with the report finding for every £1,000 the average employee earns, they can expect just £150 from a defined contribution scheme, compared with £670 from a defined benefit scheme.
David Burrowes, chair of the Equity Release Council, said: “Property and pensions form the bedrock of financial security for most people, but the rules of engagement have changed substantially over the last 30 years.
“People are living and working longer with responsibility to fund their later years and will need to think differently about their financial decisions at different life stages."
The report calls for the Government to follow up on its pledge to “help Generation Rent become Generation Buy” with plans to address the fact that 54% of people who are not yet homeowners feel this goal is “unrealistic”.
Jim Boyd, chief executive of the Equity Release Council, said: “Hopes that younger generations will enjoy greater opportunities over longer lives in good health compared to their parents must be balanced by significantly more complicated financial decisions they face, driven by the realities of elevated property prices and the decline of generous pension schemes."
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