Fewer customers are using equity release to meet cost-of-living expenses or as a source of emergency funds, data from Legal & General Home Finance has revealed.
New customers using lump sums for living expenses decreased by 16% from last year to just 10.4% and customers taking additional drawdowns for this purpose fell by 9% to 19.6%.
New customers using lump sums for emergency funds fell by 12% from last year to 18.6%, and 19% fewer customers took additional drawdowns for this purpose (6.2%).
Last week, the Office for National Statistics (ONS) found the economy grew faster than expected in the first three months of this year as the UK emerged from recession and the 12-month rate of consumer price inflation declined to 2.0% in May 2024, its slowest annual pace in almost three years.
Meanwhile, there was a significant increase in the number of customers strategically using the equity in their homes to help strengthen their financial position.
Customers using lump sums to repay mortgages increased by 58% since 2023 (38.9%) and a quarter of all customers used these funds to consolidate their debts, an increase of 18% on last year.
Lorna Shah, managing director at Legal & General Retail Retirement, said: “Our data over the last year shows a greater number of homeowners are using their property wealth to achieve longer term goals, such as paying off mortgages or other forms of debt.
“As the market continues to stabilise, and as more homeowners take a holistic approach to their later life finances, we anticipate equity release will move further into the mainstream.
“As a lender, we are continuing to anticipate the needs of customers and bringing innovation to the market, such as the introduction of our payment term lifetime mortgage in 2023, to give a broader range of solutions to people who might benefit from making better use of their property wealth.”
