Cash accessed by equity release supported nearly £3.8bn in UK gross value added (GVA), the latest report from Legal & General and the Centre for Economics and Business Research (CEBR) found. 

The report surveyed more than 2,000 homeowners, of which 339 were equity release customers.

It found that older homeowners accessing the equity held in their homes through lifetime mortgages and other forms of equity release are directly adding almost £1.8bn in GVA across the UK economy.

In addition, spending funded by equity release is further estimated to support nearly £1.1bn in ‘indirect’ effects on GVA, as well as £0.9bn in ‘induced’ effects of equity release spending on GVA.

In 2021, a record £4.3bn was released via lifetime mortgages and other forms of equity release, representing an 11% annual increase.

The money was spent across a range of sectors as homeowners supported family members, achieved their goals and boosted their incomes with the extra funding. 

The wholesale and retail sector benefitted most from the extra cash unlocked gaining £757m, while £517m was spent on the human health and social work sector.

Elsewhere, the report revealed that for every £1 of equity released via a lifetime mortgage, or other equity release product, £2.12 in GVA is supported across the UK economy.

Through its contribution to the UK economy, equity release spending by homeowners also generated more than 45,000 jobs. 

A third of the total (15,300 roles) are found in the health and social work sector, due to the high spending on care costs. 

Taking into account the indirect supply chain effects, and induced effects of this spending, an additional 35,000 jobs are supported as a result of equity release’s impact on the economy.

Legal and General Home Finance chief executive Craig Brown says: “With the property market continuing to boom, the value held in the homes of the UK’s over 55s is both significant and growing.”

“Complimenting this, over the past decade the later-life lending market has seen improved standards and advice, and a growth in flexible products to meet customer need; giving homeowners confidence and security in making use of this asset.”

“Our research demonstrates that a growing number of people will look to their property wealth to fund their lifestyle, particularly in retirement.”

“However, as this report demonstrates, the impact of the equity release market is more significant than just the spending power it gives to the individual homeowner: it funds businesses, creates jobs and makes a positive contribution to the UK economy.”