Wealthy Homeowners Leverage Property Equity for Luxuries and Loans

A recent study by lifetime mortgage lender Pure Retirement has highlighted an intriguing trend in the property market: a significant 19% of all new equity release plans in the first quarter of this year involved properties valued at over £550,000. This statistic reveals how higher-end homeowners are increasingly tapping into their property’s equity, whether for financial strategy or lifestyle enhancements.

It appears that homeowners in the £550,000 to £699,000 property value range are particularly active, accounting for 8% of new initial advances. Moreover, those owning properties worth at least £1 million contributed to 4% of these transactions. This data underscores the appeal of equity release options across various high-value property segments.

How Are the Funds Being Used?

The usage of released funds varies significantly among different homeowner groups, particularly those at the higher end of the property market. Pure Retirement’s analysis shows distinct preferences in how these funds are employed:

  • Home Improvements: About 22% of the homeowners use the equity release for upgrading their living spaces. This is slightly above the general trend, indicating a focus on enhancing property value and comfort.
  • Debt Repayment: Nearly 19% of the participants used the funds to clear debts and mortgages, a bit lower than the average across all property bands. This suggests that wealthier homeowners might have less pressing debt needs.
  • Leisure and Lifestyle: A notable 15% of the funds went towards financing holidays—4% higher than the overall average. Additionally, 11% of the funds were used to purchase cars, again surpassing the general rate by 2%.

Industry Insights and Future Directions

Paul Carter, CEO at Pure Retirement, commented on the findings, “These latest figures only serve to underline the way that equity release has become an increasingly mainstream tool that suits a wide variety of circumstances and needs – irrespective of whether that’s aspirational or needs-based borrowing, or where in the housing value spectrum. It confirms the need for flexible products that can cater for a diverse audience, and we look forward to continue to help using findings such as this to shape our future thinking and product offering to deliver best outcomes and effective solutions for those exploring later life lending.”