Equity release is helping to fund one in every £90 spent by retired people within the UK currently, according to a report by Legal & General.
The report, equity economy report, found that people are increasingly making the most of property wealth.
It also forecasts that the equity release market will surpass £12bn in 2030, with customers continuing to fund day-to-day spending, such as food, clothes, transport and entertainment, as well as occasional big purchases, such as home improvements, international holidays, and financial planning.
Meanwhile, further data from Legal and General Home Finance (LGHF) shows that customers have demonstrated a shift in spending over the first half of 2022.
Customers continued the trend of aspirational spending on treats like holidays a rise of 14% on last year’s figures, which L&G says could have been prompted by the surges in travel.
However, with inflation the highest it’s been in decades, and living costs rising, 25% of homeowners are turning to their property to help bolster their bank balances, compared to 19% last year, supplementing their income with the value found in their home.
It also found that 12% of customers are using their property wealth to fund gifts to loved ones However, this could increase further as financial pressures prompt older generations to provide more support to younger relatives.
LGHF chief executive Craig Brown says: “We are increasingly seeing people turn to their properties to achieve life-long goals, or to improve the standard of their retirement. This is especially true following the pandemic property boom, which has seen people’s homes become one of their most powerful assets.”
“Even as the cost-of-living crisis intensifies, homeowners are using property wealth to fund aspirational spending, amid pent-up demand for holidays. But we’re also seeing priorities shifting in response to the cost-of-living crisis. Many homeowners are looking to their property wealth to help bolster their squeezed incomes and build a safety net for both them and their loved ones.”
