Shift sees more funds directed to home improvements and family support
Legal & General’s Home Finance division has reported a notable change in how homeowners are using lifetime mortgages, with fewer customers relying on property wealth to settle debts.
According to L&G’s latest figures, the share of new applicants using equity release to pay off an existing mortgage dropped from 31% in the first half of 2024 to 19% in the same period this year. The proportion using it to clear other debts, such as loans or credit cards, also fell, moving from 25% to 23%.
Instead, more homeowners are choosing to use equity release for quality-of-life spending and to assist family members. Half of new customers are now using the funds for home improvements, while 18% are providing financial gifts to relatives.
This shift in customer behaviour comes as the equity release market recorded a strong first quarter. The Equity Release Council reported total lending of £665 million in the first three months of 2025, a 32% increase compared to the same period last year. This marks the fourth consecutive quarter of growth, driven largely by a 14% annual rise in new customers opting for lump sum products. The increase in activity has been supported by a wider range of product offerings and a 2.8% annual rise in house prices.
“Property wealth continues to be a useful tool for homeowners looking to fund later life and help achieve longer term goals,” said Mike Batty (pictured right), product and proposition director at L&G Home Finance. “It’s encouraging to see people turning to the money tied up in bricks and mortar to improve their quality of life.
“As a lender, we continue to work with advisers and the wider industry to ensure the best outcomes for people looking to benefit from accessing their property wealth. While not suitable for everyone, lifetime mortgage solutions can be an important consideration as part of a holistic approach to financial planning.”
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