According to the latest data from Mortgage Advice Bureau Later Life’s 2021 Market Monitor, 38% of homeowners used equity release to repay their mortgage in the past year.
The report revealed that attitudes towards equity release are shifting, with customers using it more to meet financial needs than for discretionary spending.
While home improvements were once the primary reason for using equity release, the proportion of customers using housing equity for this purpose has almost halved from 61% in 2020 to 34% in 2021.
Gifting, driven by the Stamp Duty holiday, remained fairly robust, with 22% of customers choosing to use all or some of their equity for this purpose.
With interest-only mortgages popular with those over 55 years old, and many of these mortgages coming to an end, equity release is seen as a means to repay outstanding interest-only mortgages.
The report indicates that equity release can provide a financial lifeline for those without a plan for when their interest-only mortgage ends.
Steve Humphries, proposition director, Mortgage Advice Bureau Later Life, said: “Equity release offers individuals a way to benefit from stored equity without having to downsize their property, and it is clear from the Market Monitor that attitudes around how it is used are changing.
“With interest-only mortgages a popular option with those in the over-55 age bracket, and many of these terms coming to an end, many will be turning to equity release as a means to repay their outstanding interest-only mortgages instead.
“It’s an indisputable fact that equity release can provide a financial lifeline for those without a plan for what happens when their interest-only mortgage ends.
“In fact, according to the 2021 Market Monitor, 38% of customers used some of their released funds to pay off their existing mortgage in 2021.”
