New data shows shift in priorities of older borrowers
A growing proportion of equity release customers are using funds to pay off existing mortgages, according to new figures from Key Advice.
The adviser’s analysis indicates that 63% of clients accessed property wealth to clear mortgage debt in the first quarter of this year, up from 36% in the same period last year. The trend suggests a change in priorities, with more individuals seeking financial security amid persistent high interest rates and ongoing inflationary pressures affecting household budgets.
The average initial amount released rose to £62,930 in the first quarter, marking a 13% increase year-on-year and the first rise in three years. London customers released an average of £145,471. However, the average total facility, including approved drawdowns, fell to £78,942. This points to a preference for meeting immediate needs and a cautious approach to borrowing.
Fewer customers are using equity release for home improvements, with usage dropping to 5% from 14% last year. Similarly, the proportion using funds to purchase vehicles declined to 3.9% from 7.7%. Where home improvements were made, the focus was on accessibility, energy efficiency, or safety rather than aesthetic upgrades.
Gifting to family members accounted for 9.1% of usage, one of the highest categories. With recent fiscal changes likely to impact tax liabilities, efficient intergenerational wealth transfer is expected to remain a significant trend. Additionally, 9.1% of customers used funds to pay off non-mortgage debts, and the share using equity release for holidays increased to 7.6% from 3.2%.
The average customer age is 69, with couples making up 59% of applications. Single women submitted more applications than single men. The average property value stood at £319,808, and the average initial loan-to-value ratio was 19%.
“Equity release has become more about financial resilience,” said Rachel East (pictured right), director of advice and adviser services at Key Advice. “Stubbornly high interest rates and ongoing cost-of-living pressures are pushing households to use some of their property wealth to manage essentials first.
“Along with the increase in gifting, this reinforces the view of equity release as a strategic financial tool and that is being increasingly deployed to safeguard day-to-day financial stability and assist younger generations who are in need of assistance. Customers spread funds across multiple goals showing equity release is increasingly relevant as part of a holistic plan to fund later life.”
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