-
Corporate
- Customers
More than £7bn boost to the economy from Britons releasing housing equity for retirement, new research from Legal & General reveals.
9 Feb 2018
Britons releasing equity from their homes for retirement have supported the UK economy by over £7bn in 2017, according to new research from Legal & General Home Finance and the Centre for Economics and Business Research (CEBR). The lifetime mortgage lender’s ‘Silver Spenders’ report found that equity release contributes up to £7.1bn to UK gross output.
Lifetime mortgages - a type of equity release - have seen a surge in popularity amongst Britain’s older homeowners in recent years, becoming the fastest growing sector of the mortgage market. Lifetime mortgage sales tripled between 2013 and 2017, rising from just over £1bn to more than £3bn in 2017, according to the Equity Release Council.[2]
The new research set out to analyse the current direct, indirect and induced impact of the equity released from homeowners’ properties on the UK economy and specific industries. It found that for every £1 of housing wealth accessed through equity release products, £2.34 is generated for the British economy.
Breaking down the direct economic impact industry by industry, manufacturing benefits the most from equity release spending to the tune of £1.34bn, whilst the construction sector benefits from a £349m injection - the equivalent annual salaries of 14,000 construction workers or 11,400 electricians. Health and social work was also supported by equity release spending. The research highlighted that the sector was boosted by £203m, which is the equivalent of 7,500 nurses, 3,200 doctors or 9,600 community workers.
When analysing the actual number of jobs created by equity release spending, Legal & General’s research found that equity release supports 37,100 jobs directly and indirectly across the UK. And this is likely to grow significantly over time.
As part of the research, Legal & General surveyed over 2,500 consumers, asking them about their opinions on accessing property wealth in retirement. Only 3% of Britain’s homeowners said they had released equity, yet 18% said they would consider accessing their housing wealth via a lifetime mortgage in the future and a further 3% said they had considered doing so in the past. The means almost a quarter (24%) of UK homeowners, or 3.4m households are open to the idea of accessing their property wealth in retirement.[3]
Legal & General entered the lifetime mortgage market in 2015 and became the largest provider of the product in H1 2017. Newly released figures now show that Legal & General Home Finance wrote £1bn in lifetime mortgage advances last year.
Chris Knight, Chief Executive Officer, 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.
“Our ‘Silver Spenders’ research shows that homeowners aged over 55 are boosting UK gross output by up to £7.1bn, with the benefits being felt across industries ranging from construction and manufacturing to health and social services. 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.
“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 £3bn and a £5bn plus market is a strong possibility by 2020.[4] But there is an estimated £1.5 trillion of property wealth in hands of Britain’s over-55s, so there is the potential for retirees and their housing equity to play a much bigger role in boosting UK GDP in years to come.”
[1] Gross output is the total value of a company’s or sector’s output including intermediate consumption. This figure includes the direct, indirect and induced impact on the economy:
[2] Equity Release Council Q4 2017 figures: http://www.equityreleasecouncil.com/news/equity-release-records-broken-as-unprecedented-q4-activity-sees/
[3] Based on UK homeownership figures in the English Housing Survey 2015 to 2016 report: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/658478/2015-16_EHS_Headline_Report.pdf
[4] Equity Release Council Q4 2017 figures: http://www.equityreleasecouncil.com/news/equity-release-records-broken-as-unprecedented-q4-activity-sees/
Chris Knight, Chief Executive Officer, Legal & General Retirement Retail: There is an estimated £1.5 trillion of property wealth in hands of Britain’s over-55s, so there is the potential for retirees and their housing equity to play a much bigger role in boosting UK GDP in years to come.
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with £1.1 trillion in total assets under management (as at HY24) of which c.40% (c.£0.5 trillion) is international.
We have a highly synergistic business model, which continues to drive strong returns. We are a leading international player in Institutional Retirement, in Retail Savings and Protection, and in both public and private markets through our Asset Management division. Across the Group, we are committed to responsible investing and dedicated to serving the long-term savings and investment needs of customers and society.
As at 3 December 2024, Legal & General has a market capitalisation of £13.1 billion.