Fewer homeowners turning to lifetime mortgages to fund living expenses or emergency purchases as cost-of-living pressures ease

• There has been a significant increase in customers using lump-sums to consolidate debts and repay mortgages
• The shift in customer behaviour indicates financial pressures on homeowners may be easing

New data from Legal & General Home Finance¹ shows that fewer customers are using equity release to meet cost of living expenses or as a source of emergency funds.

New customers using lumps sums for living expenses decreased by 16% from last year to just 10.4% and customers taking additional drawdowns for this purpose fell by 9% to 19.6%. New customers using lumps sums for emergency funds fell by 12% from last year to 18.6% and 19% less customers took additional drawdowns for this purpose (6.2%).

Last week, the Office for National Statistics (ONS)² found the economy grew more quickly than expected in the first three months of this year as the UK emerged from recession and the 12-month rate of consumer price inflation declined to 2.0% in May 2024, its slowest annual pace in almost three years. This indicates that pressures on households may be beginning to ease.

Meanwhile, there has been a significant increase in the number of customers strategically using the equity in their homes to help strengthen their financial position. Customers using lump sums to repay mortgages increased by 58% since 2023 (38.9% of customers) and a quarter of all customers used these funds to consolidate their debts, an increase of 18% on last year.

References

¹Legal & General Home Finance data analysing loans across 2023 and 2024.
²Office for National Statistics, Quarterly economic commentary: January to March 2024.