Older homeowners releasing equity from the value of their homes boosted the economy by £7 billion last year.
Lifetime mortgages are a booming financial product and the amount of money released by silver spenders tripled from £1 billion in 2013 to £3.7 billion 2017, according to the latest figures from trade body The Equity Release Council.
The report by the Centre for Economics and Business Research for Legal & General also calculated that every £1 freed up by equity released generated £2.34 for the economy.
Chris Knight, chief executive of Legal & General Retirement Retail, said: “It’s no secret that lifetime mortgages have been growing in popularity in recent years, but as more and more Britons decide to access the cash tied up in their homes for retirement, no one has yet asked the question about the impact this newly unlocked equity is having on our economy.”
Unlocking property wealth
“Not only are these older homeowners accessing equity that would otherwise have remained locked up in their properties, whether for a holiday or a home renovation, but these funds are filtering through the economy as well.”
“That is boosting the spending power of our businesses, generating jobs and spurring economic growth across the UK.”
Legal & General also asked 2,500 consumers about their views on how to unlock property wealth in retirement.
Only 3% had released equity, while 18% said they would consider a lifetime mortgage and another 3% said they had considered equity release in the past.
Boost for economy
The figures reveal 24% of UK homeowners – or 3.4 million households – would consider equity release in retirement.
Knight said: “With longevity increasing and awareness about lifetime mortgages growing, the role of equity release and its contribution to the national economy is set to grow further. Last year saw the sector surpass £3 billion and a £5 billion plus market is a strong possibility by 2020.”
“But there is an estimated £1.5 trillion of property wealth is in hands of Britain’s over-55s, so there is potential for retirees and their housing equity to play a much bigger role in boosting UK GDP in years to come.”
He disclosed manufacturing (£1.32 billion), construction (£349 million) and health care (£203 billion) benefit most from the equity release cash taken by consumers.
