Equity release market provides £3.8bn boost in GVA to UK economy

Older homeowners accessing the value held in their homes via lifetime mortgages and other forms of equity release are directly adding almost £1.8bn in gross value added GVA across the UK economy, new research has revealed.

According to a report from Legal & General and the Centre for Economics and Business Research (CEBR), 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.

These figures bring the total impacts on UK economic activity to £3.8bn.

L&G’s report revealed that in 2021, a record £4.3bn was released via lifetime mortgages and other forms of equity release – an 11% annual increase. This money, previously tied up in the significant property wealth held by the UK’s over-55s, was then spent across a range of sectors as homeowners supported family members, achieved their goals and boosted their incomes with the extra funding.

The report also highlighted the positive impact of equity release across supply chains and to employees, after it supported just under £2bn in GVA in 2021. This figure means that for every £1 spent as a result of equity release, a total of £2.12 in terms of economic activity is supported across the UK economy.

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

“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.”

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