Increased use of equity release to fund vacations

According to the latest data, the number of elderly owners using the release of equity to finance their holidays has tripled.

Data from Legal and General Home Finance shows that 20% of withdrawing customers used these funds to travel in the first two months of 2022. This compares to just 7% in the same period last year.

L&G says the shift was prompted by a relaxation of pandemic restrictions. However, he also said there was also an increase in other ‘lifestyle expenses’, with the number of lifetime mortgage borrowers to buy credit union increasing by two-thirds year-on-year, this which suggests that consumer confidence is back.

Over the same period, the number of customers using lifetime mortgage solutions for health and medical purposes nearly doubled, in the first two months of 2022, compared to January and February 2021. L&G says this is probably due to increased emphasis on personal wellbeing and prolonged NHS waiting times for certain procedures.

Although the numbers have not returned to pre-pandemic levels, the data indicates that consumer spending confidence is gradually returning. However, L&G warns that consumer habits could change again due to the cost of living crisis. A study by the Office for National Statistics in February found that 66% of adults surveyed saw their cost of living rise, with 87% seeing rising food prices and 79% seeing rising energy bills .

It remains to be seen whether owners will use the capital release to try to cover these increases in the day-to-day cost of living.

Craig Brown, CEO of Legal & General Home Finance, says, “A home is a valuable asset that can play a key role in supporting retirement, whether it’s ambitious spending or helping younger members of the family who may have encountered financial difficulties.

“The remainder of 2022 should bring a new range of challenges, as cost of living concerns hit households across the country, and we anticipate people may be looking to lifetime mortgages for different reasons in light of these pressures, for example for donation purposes or to increase their retirement income.

“The data shows that even as the cost of living crisis looms, customers have used lifetime mortgages for ambitious spending. We emphasize the importance of people looking ahead and planning and budgeting for their future needs, goals and priorities.

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