Unlocking Home Equity Is A Growing Trend Among the Middle Classes

Equity release is no longer seen as a last-ditch effort for cash-strapped homeowners but as a savvy financial strategy embraced by those with higher-value properties.

According to the latest figures from Pure Retirement, a leading equity release provider, there’s been a notable increase in the number of homeowners opting for equity release, particularly among those with properties in the higher-value brackets. In 2023, applications from owners of properties valued between £250,000 and £399,999 rose to 36%, up from 35% the previous year. Even more striking is the jump in applications for properties valued between £400,000 and £549,999, which leaped to 19% in 2023 from 17% in 2022.

Interestingly, the appetite for equity release among owners of properties valued between £550,000 and £699,999 remained steady, with applications holding firm at 8%. This data paints a picture of a financial tool that has found a solid foothold among the middle classes, who are increasingly comfortable leveraging their home’s equity for various purposes.

Supporting Family Through Equity Release

One of the standout revelations from Pure Retirement’s data is the use of equity release to provide financial support to family members. 12% of equity release funds from homeowners with properties valued between £400,000 and £700,000 were gifted as a living inheritance. This trend underscores the role of equity release as a means of financial planning and support within families, allowing homeowners to pass on wealth to their loved ones during their lifetime.

The Changing Face of Equity Release

The report from Pure Retirement also highlights a shift in the demographic and socioeconomic profile of those opting for equity release. The decrease in applications from those with homes valued below £250,000, along with the rise in applications from those at the higher end of the property market, indicates a broadening appeal of equity release products. Notably, one in every 25 cases came from owners of properties worth £1 million or more, illustrating the diversity of homeowners who now see equity release as a viable financial option.

Paul Carter, CEO of Pure Retirement, emphasised this shift, “These latest figures demonstrate unequivocally that lifetime mortgages are anything but a product of last resort for those from lower socioeconomic groups, and have instead evolved to become an effective financial planning tool for over-55s from all walks of life. The shifts in house values among applicants points to equity release increasingly being used by the middle classes, with one in 25 cases also coming from owners of £1m properties, underlying the broad audience that modern and sophisticated equity release products now appeal to thanks to ongoing product development.”

Conclusion

The rising popularity of equity release among the middle classes signals a significant shift in how homeowners view and utilise their property’s value. Far from being a measure of desperation, equity release has become a strategic financial planning tool that offers flexibility and support for families, contributing to its growing appeal across a broad spectrum of homeowners. As the market continues to evolve, it’s likely that equity release will play an increasingly prominent role in the financial planning of the middle classes in the UK.


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