Equity release customers are increasingly using the funds unlocked from their homes to clear existing mortgages, according to new data from Key Advice.
The UK equity release adviser said 63% of customers used property wealth to repay a mortgage in the first quarter of this year, up from 36% in the second quarter of last year, signalling a shift in priorities driven by financial pressure and a desire for stability.
Key Advice said the trend reflects customers’ focus on financial resilience as interest rates remain higher than expected and cost of living pressures continue to squeeze household budgets.
Despite the growing focus on mortgage repayment, two-thirds of customers still spread released funds across multiple purposes, highlighting the increasing use of modern lifetime mortgages as multi-use financial planning tools.
The analysis shows that the average initial amount released in the first quarter reached £62,930, a 13% rise year-on-year and the first increase in three years.
Customers in London released an average of £145,471. However, the average total facility, including approved drawdowns, fell to £78,942 as customers concentrated on meeting immediate needs and advisers remained cautious about increasing borrowing costs unnecessarily.
Use of funds for home improvements fell to 5% from 14% a year earlier, with spending focused on accessibility, energy efficiency and safety rather than cosmetic upgrades.
The proportion using equity release to buy cars fell to 3.9% from 7.7%.
Gifting accounted for 9.1% of usage, one of the highest categories, with expectations that intergenerational wealth planning will remain a strong theme following tax implications from the November Budget.
A further 9.1% of customers used funds to repay debts other than mortgages, and spending on holidays rose to 7.6% from 3.2%.
The average customer age is 69, with couples accounting for 59% of applications. Single women submit more applications than single men.
The average property value stands at £319,808 with an initial LTV of 19%.
Rachel East, director of advice and adviser services at Key Advice, said: “Equity release has become more about financial resilience.
“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.”
