The shock figures come from independent research by think tank the Pension policy Institute.

The report urges over 50s to save more to avoid a retirement of poverty.

Increased life expectancy is to blame for many over 50s having to revise their pension plans, says the PPI.

Niki Cleal, PPI Director, said: “In the last three decades, life expectancy has increased dramatically. This is good news for individuals, but it also means that many people will need to save more and work longer if they want to have an adequate retirement income.”

The research showed around 85% of the over 50s who are working in 2011 might have enough state and private pension income to meet a minimum acceptable standard of living in retirement of £11,000 per annum – if they continue to work and save until they are eligible to receive their state pension.

However, the researchers point out, many will consider an income in retirement at this level inadequate.

A smaller proportion of today’s over 50s are likely to be able to have a high enough retirement income to replicate the full standard of living that they enjoyed during their working life.

“On a positive note, around 40% of today’s over 50s who are still working might have sufficient state and private pension income to have a retirement income that would allow them to replicate their full living standards in working life, if they continue to work and save until they are eligible to receive their state pension,” said Cleal.

“A further 10% of the over 50s might have sufficient state and private pension income to replicate working life living standards, if they continue to work and save for between one and five years after their state pension age.”

“On a less positive note, 5% of today’s over 50s might have to work and save for between six and 10 years after state pension age and a further 45% would have to work and save for 11 years or more beyond their state pension age to replicate their working life living standards in retirement.

“This demonstrates that many people need to start saving more today, if they want to avoid having to work much longer than they planned and want to have an adequate retirement income in the future.”

The number of homeowners opting for equity release was also up 6%, with just over 4,000 new loans.

The industry statistics were compiled for the first three months of 2012 by trade body Safe Home Income Plans (SHIP).

In the first quarter, total advances of £199.1 million were advanced , compared with £181.6 million for the same period in 2011. The number of plans also increased 6% to 4,057 from 3,838 in the first quarter of 2011.

Around two-thirds of new borrowers are taking their money as drawdown mortgages, followed by lump sum mortgages (32%) and home reversions (2%).

Drawdown mortgage popularity is at the highest for around four years, probably because borrowers are choosing to supplement their monthly income rather than pay for one-off costs like a car, holiday or home improvements, says SHIP.

SHIP director general Andrea Rozario said: “These figures are extremely encouraging and show that the market is continuing to grow steadily, year on year. Furthermore, the increase in the number of customers electing to drawdown their housing wealth in stages reflects the growing awareness for the different uses of housing equity – such as supplementing an existing income.

“This year is a significant and exciting one for SHIP, as we expand our membership to include members from across the equity release industry. This will allow us to provide an even more comprehensive look at equity release sales figures in the future through the expansion of data available from new members.

“These figures show that there is a growing appetite amongst consumers for equity release products, and by bringing together organisations from across the industry we will ensure that we are well placed to meet this demand”.

The Bank of England’s quarterly lending activity survey has highlighted mortgage lenders concerns over house prices and the current economic climate. Lenders are also facing higher funding costs as a result of the eurozone debt crisis. The Bank warned that it is likely that these concerns will force many lenders to tighten up their credit scoring criteria for assessing whether to lend to a prospective house buyer or not.

A tightening of credit scoring criteria is likely to see even more high loan to value mortgages disappear, leaving first time house buyers in a much more difficult position.

Since the beginning of the international banking crisis in 2007, mortgages have become increasingly difficult for people to obtain. The old 120% or 130% mortgages vanished, leaving people needing to find bigger and bigger deposits in order to buy a house. Many new borrowers now have to find at least 20% or 25% of a property’s value before becoming eligible for a mortgage.

As a result, fewer first time buyers have been able to enter the property market, fewer homes have been sold and prices have fallen, leaving the property market in a state of stagnation.

In the report on credit conditions in the UK, the Bank Of England indicated that the availability of credit was falling and lenders expect it to continue over the next quarter. They suggest that any increase in borrowing will only be to those people who can afford a large deposit.

The Bank of England indicated that lenders had also revised their expectations for people’s levels of disposable income. Many household will find their budgets squeezed as wages fail to keep up with inflation, leaving little room for some people to afford more debt.

The survey did suggest that many lenders were now looking at new and innovative deals to help those who have smaller deposits and facing difficulties in getting a mortgage.

Separate figures from the Bank of England have recently shown that there has been little change to the numbers of approved mortgages, that have not yet been completed. The figures reveal that this level is currently half what it was before the international banking crisis began.

The Bank of England also suggested that the demand for buy to let mortgages, which had been rising in the last quarter of 2011, is also likely to fall back over the next few months.

The credit report did indicate that there had been improvements on the rates that people had been defaulting on their loans, both secured and unsecured. The Bank indicated that they also expect this to continue.

However, companies are also now borrowing less, with lenders suggesting that their ability to lend to companies during the next quarter is unlikely to change. The report showed that medium to large sized companies had also been defaulting on their existing loans more.

According to the Halifax, in 2011, there were 187,000 people in the UK who bought a home for the first time. This number was 7% less than 2010 and nearly 54% lower than the recent peak of 402,800 in 2006.

The Halifax indicated that this was the lowest level that they had recorded since they began monitoring the levels in 1974.

Homes are considered to be affordable when they are priced at four times the average earnings for the area they are found in. At the peak of the property market in 2007, ‘affordable’ houses were to be found in just 5% of local authority districts around the UK. The number of districts with affordable housing has now risen to 44%, the highest level since 2003.

The report also indicated that there was a divide between the north and south of England when it cam to housing affordability. 95% of housing that was considered affordable was found in the Midlands and the North of England.

Seven of the top ten districts with affordable homes were found in Scotland. London had no housing that fell into the affordable bracket, and Peterborough was found to be the most affordable local authority district in Southern England.

A spokesperson from the Halifax suggested that while housing is becoming more affordable for people trying to get onto the property ladder, borrowing conditions and the current economic situation is preventing many from entering the market.

The Halifax indicated that in 2011, people needed an average deposit of £27,032 to buy a property. The figure was lower than the £31,905 needed in 2010, but still much higher than it was in 2007. The current average deposit equates to around 20% of the property value, where four years ago, it was only 10%.

The Halifax suggested that the majority people who were able to join the market in 2011 had received support from parents, with 64% of first time buyers reporting that they had received help from their parents or relatives.

However, the Halifax suggested that the number of first time buyers may start to grow again next year. The signs that the average deposit needed for a home and the re-introduction of some 95% mortgages, combined with the higher proportion of affordable housing, may see more people buy houses for the first time.

The government are hoping that first time buyers will be able to benefit from their mortgage indemnity scheme and encourage more people to buy.

The the temporary increase in the stamp duty threshold for first time buyers from £125,000 to £250,000 is due to end in March 2012. This benefited nearly 40% of first time buyers in 2011, and some experts suggest that it could disrupt the market when it returns to £125,000.

The CML suggested that the current economic instability is largely responsible for the uncertainties in the market.

Figures released by the CML show that in September, the number of mortgages that were taken out to purchase a new property had fallen by 2% from August. Although the number of mortgages actually taken had dropped, the number of approved mortgages was actually 3% higher than in September 2010.

People buying property for the first time also needed an average deposit of 20% of the homes value. Whilst this figure was about the same as in August, the number of first time buyers fell slightly in September.

However, when compared to last year, the average deposit needed to purchase a property had fallen slightly and and the number of first time buyers has risen, although it is still at a low level.

Experts suggest that the high deposit required to purchase a property is one of the main reasons why the housing market is currently slow and the CMI are calling for more assistance to help first time buyers get on the property ladder.

In September, the number of property owners who remortgaged fell slightly from August leading to some suggestions that the remortgage market is starting to struggle. However, the third quarter of 2011 showed 23% more remortgages than in the third quarter of 2010.

Mr Paul Smee from the CML suggested that whilst there were small drops in house purchases and remortgages between August and September, the market was relatively stable.

However, Mr Smee went on to suggest that the Eurozone crisis is having an impact on bank to bank lending. The impact on the banks’ confidence in lending to each other is leading to higher borrowing charges between them. This in turn is raising the costs of mortgages and as such is making the future of the market more difficult to predict.

The CMI report suggests allowing potential home buyers to borrow from their pension funds to find the deposit needed to buy a home. This could also come with a system of mortgage indemnity guarantees, allowing any mortgage lenders to claim on the indemnity, should the borrower then fall behind on their mortgage repayments.

The mortgage lender and house builders could work together to provide the guarantees, but the government could also share the risks if they could not be applied on a purely commercial basis.

John Cridland from the CBI suggested that this could give hope and support to young, first time buyers. He added: “We could reduce the risk of higher loan-to-value mortgages if the government encouraged lenders to take out insurance against the borrower failing to meet payments. Owning a home has been a natural aspiration for generations of Britons since the 1950s, and should not become the preserve of a lucky few.”

The house market continues to behave differently depending on where the buyer looks for property. The value of property in London is continuing to rise, whilst in Wales and some other regions in England, property value is falling sharply.

For the whole of England and Wales, the value of property has fallen by 0.3% between August and September this year. When compared to the value of property in September 2010, prices fell by 2.6% on average for the UK, with terraced housing seeing the biggest falls in price.

The average price of property across England and Wales is now £162,109.

However, when the figures for the different regions in the UK are compared, they reveal that properties in some areas are maintaining or increasing in value whilst others are losing value.

London is the only area to see a rise in value over the last year, where prices are 2.7% higher.

The South East of England have seen the value of property fall by only 2.1% since last year.

The South West has seen a 2.4% fall in prices since last year, although value rose by 0.5%
from August to September.
The East of England saw a 1.1% fall in prices between August and September, and only a 3% fall in prices from September last year. The Midlands saw bigger falls in prices. The value of West Midlands property was down by 0.2% from August and 4.1% for the year, whilst the East Midlands were down by 1.6% from August and 4.3% for the whole year.

Once again, the North of England and Wales saw the biggest falls in house prices. Wales reported a 1.7% fall from August and a 5.8% fall in value for the whole year. The Yorkshire and Humber region reported a 0.4% rise in property value from August this year, but was still 4.9% below the value for September last year.

The North East saw the biggest drop in prices for the whole country, with property value falling by 3.9% from August and 8.2% for the whole year. In the North, only the North West was relatively unscathed, with a 1% rise in value from August and only a 2.7% fall from last year.

However, the National Association of Estate Agents have suggested that the number of people who are looking for property has been rising and has reached the highest point for the last four years. Although they do point out that many people are remaining cautious when it comes to actually buying a property.

Other experts suggest that the housing market is now split between people who need to sell their home and people who don’t. People looking for a quick sale, following the death of a family member for example, are pricing their properties low. Others who are in no rush are holding out, leaving properties on their estate agents books for long periods of time.

Nearly every financial firm (98%) predicts releasing equity from property is ‘crucial’ for many looking for comfortable later years, reports financial firm LV=, who conducted the survey.

Independent financial advisers feel home equity release is an untapped market and destined to grow.

Most believe lack of pension provision (48%) will lead to retirement savers looking at the releasing cash from their homes.

Others cite other reasons, like repaying credit cards and debts (30%) or financing expensive home improvements or long term care (9%).

IFAs also expect more equity release providers to bring products to the market in the coming months and blame lack of choice as one of the barriers to pensioners considering the move.

Advisers also believe safeguarding customers is important with nine out of 10 believing regulated specialists should arrange equity release schemes and almost three quarters (71%) spoke against relaxing regulation on the grounds of risks to buyers.

Vanessa Owen, LV= head of equity release said: “It’s encouraging to see the majority of IFAs believe that equity release has a strong role to play in helping to solve problems such as the funding of long-term care and a lack of pensions provision in retirement.

“For many people, their home is their greatest asset so it is understandable that more and more people will want, or need, to access the equity in their home.”

Another recent report, by investment firm Barings Asset Management, disclosed that around one in 8 retirement savers were relying on a property pension to finance their old age as they had no other savings.
These property owners are mainly planning on equity release to provide the funds for their retirement lifestyle.

The same report also found that lending to private business decreased by £2.5bn between May and June.

The British Bankers’ Association analysed the amount of money deposited into savings accounts between January and June in 2011 and compared it with January to June 2010.

£6.1bn was saved this year in comparison with £15.9bn last year. The British Bankers’ Association suggest that this could be due to rising prices of regular household bills such as petrol and diesel, grocery shopping and utilities. Experts are concerned that half of the major energy providers in the UK are due to announce further price rises this week which will only force people to dig deeper into their savings accounts to make ends meet.

According to the National Statistics Office, the rate of inflation in the UK stood at 4.2% in June. Between May and June alone, the cost of grocery shopping is said to have risen by 0.9%. In the same period in 2010, it fell slightly by 0.1%.

Very low interest rates are also thought to be contributing to much lower levels of saving. Normal high street banks are offering particularly low returns on savings which could be another reason that deposits are slowing.

The British Bankers’ Association figures also suggest that the amount loaned to customers on mortgages and credit cards was also low. Most notably, repayment income exceeded the amount of new borrowing on credit cards overall.

Although the amount of new, approved mortgages rose in June this year, the figure is still 6% lower than in June 2010 at 31,747 approved products. Chief UK economist at IHS Global Insight, Howard Archer, expects house prices to fall by a further 5% over the coming year as a result. This would result in an overall drop of 10% in the last two years.

The number of accepted remortgages rose by just under 10% to 24,080 in June 2011, compared to 21,967 in May. One reason for this trend could be that interest rates were expected to rise, although this prediction has not yet materialised, and some analysts believe interest rates may now stay at their current levels until 2012. High street lenders are increasing their remortgage offerings for homeowners in an attempt to revitalise the mortgage market and increase competition.

Statistics Director at the British Bankers’ Association, David Dooks, said the figures generally prove that the mortgage market in the UK remains stagnant, adding: “Some growth is coming from the buy-to-let sector to meet demand for rental properties.”

Almost two thirds of over 65s do not consider the pension is sufficient to cover living costs even if they do not have to pay rent or a mortgage, according to a study by the Equity Release Solicitors Alliance (ERSA).

The result is more are considering turning to equity release to provide the money to top up the proposed £7,280 a year flat rate pension – for a couple, the pension doubles to £14,560.

Only one in four reckon that the state pension will give them enough cash to live on in retirement.

Different age groups have opposing views about the flat rate pension. Young adults tend to think the payment is enough for a comfortable lifestyle, while over 55s and the retired consider £140 a week is not sufficient.

ERSA chair Claire Barker said: “The government is seeking to encourage greater individual responsibility in retirement planning. As such people will need to carefully assess how they will provide themselves with an income to supplement the proposed new flat rate pension.

“People in retirement face different demands on their income. They are more exposed to specific price rises – such as fuel price hikes – and they may face substantial costs arising from long-term care.

“For many people in retirement their home will remain their largest asset. With the average house price in the UK standing at £161,823 in May, it will make sense that people look to equity release.”

ERSA’s survey also highlighted an increasing number of people are more positive about equity release compared to two years ago, while 19% of people are ‘definitely considering’ equity release to top up their retirement income.

Equity release gives a lump sum or regular monthly payment to over 55s who own their home without any mortgage.

The average equity release amount is £47,323, says industry trade organisation Safe Home Income Plans.

Latest property price statistics put the value of an average home around £161,000.

Specialist retirement solutions provider Partnership has designed the fee-free package that includes a valuation for homeowners with a property worth at least £70,000 who want to raise £25,000 or more in cash.

Interest is faxed at 7.65% with a typical APR of 7.7%.

The firm explains the fee-free package is aimed to help homeowners look seriously at equity release without committing them to fees if they should pull out of the deal before raising any cash.

Partnership includes a ‘no negative equity’ guarantee as standard with the enhanced lifetime mortgage.

The firm claims this allays fears for homeowners with concerns about taking equity release on a property which may become worth less than the value of the mortgage.

Ged Hosty, managing director of equity release at Partnership, said: “The market needs innovation to stimulate growth. We already know that equity release provides a much needed source for income for people in retirement who find themselves without adequate pension provision but have substantial equity in their properties.

“Partnership has refined this product to benefit those with compromised health conditions. The enhanced lifetime mortgage will provide terms for homeowners with qualifying conditions or circumstances and a simplified underwriting process means that a short list of medical questions can be completed online in minutes to confirm eligibility.

Hosty also commented that the cash raised from equity release is for any purpose – not just supplementing pension income.

“During the credit crisis we saw many more people using their equity release to pay off their debts, and this is a trend that is continuing,” he said.

“As many younger people are increasingly facing unprecedented debt and have to meet the costs of funding their university education or getting on the housing ladder, pensioners who can access this income clearly feel they can play a useful role to help their families.”