Equity release trends and demographics: Understanding the Christmas season

As an equity release lender, we observe unique trends around Christmas time that shed light on why people choose to unlock the value in their homes during this period. By analysing applicant demographics from December 2023, we can gain valuable insights into the type of homeowner who decides to take equity release, their reasons for doing so, and the financial details involved. This information is crucial for you, as an equity release adviser, to help potential customers make informed decisions and to further understand the opportunities to support your customers.

Profile of equity release applicants

Our data shows a diverse range of individuals applying for equity release in December of 2023. The average age of applicants is 67 years, with the majority (29.9%) falling within the 65-69 age bracket. This age group is typically entering retirement, a time when financial needs often change and may prompt the need for additional funds.

In terms of property values, the mean property value for applicants is £522.5K, with a median of £350.0K. Most properties fall within the £300K – £400K range (22.9%), followed by those valued between £400K – £500K (16.0%). This indicates that many homeowners possess significant property wealth, which they can unlock through equity release.

Reasons for Equity Release

Understanding why people choose to take equity release is fundamental to discovering where your clients could benefit. Our data highlights several key reasons:

• Home Improvements (39.6%): Many individuals wish to enhance their living spaces during the festive season to accommodate family gatherings or to enjoy a more comfortable home environment.
• Mortgage Repayment (29.2%): Reducing or eliminating mortgage payments can alleviate monthly financial burdens and provide financial stability in retirement.
• Early Inheritance (11.1%): Some choose to release equity to provide financial help to their children or grandchildren.
• Supplementing Income (9.0%): Additional funds can improve quality of life and cover unexpected expenses.

Financial metrics and loan details

The initial amount of equity released averages at £72.8K. This amount reflects the typical financial relief sought by homeowners. The Loan to Value (LTV) percentage, which represents the loan amount as a percentage of the property value, averages 17% and most applicants (41.7%) fall within the 20% – 30% LTV range, suggesting a conservative approach to borrowing against their property value.

Geographical distribution and regional insights

The regional distribution of equity release applicants at this time of year is varied, covering the entirety of the UK. However, specific regions show higher concentrations, indicating localised trends in property wealth and financial needs. The postcode data reveals that equity release application is most concentrated in the south, suggesting that regional economic conditions and property values significantly influence the decision to release equity.

Drawdown information

Out of our applicants in December 2023, 56.2% of applicants did not choose to take an immediate drawdown, suggesting a strategic approach where funds are accessed as needed rather than upfront.

For those who accessed drawdown funds, the amounts varied. 18.8% drew between £25K – £50K, and 16.7% drew between £10K – £25K. This flexibility in drawdown options allows customers to tailor the equity release to their specific financial needs.

Customer demographics and preferences

Applicant type is another crucial aspect of our analysis. Single female applicants represent 27.1% of the total, while single males account for 15.3%. Joint applicants constitute the majority at 57.6%, indicating that equity release is a popular choice among couples looking to enhance their financial situation in retirement.

The data also sheds light on rural versus urban applicants, with rural areas (37.5%) and suburban areas (35.4%) showing significant interest. This suggests that equity release is a valuable financial tool across different living arrangements and lifestyles across the UK.

The Christmas connection

As we approach the festive season, clients may take the opportunity to discuss their financial options with family, and accessing a flexible financial solution such as equity release may be one topic of discussion.

Our data underscores the importance of equity release as a versatile financial solution tailored to meet various needs, from home improvements and mortgage repayment to supplementing retirement income. As an equity release lender, we are committed to providing personalised solutions that help our customers achieve their financial goals.

Practical advice for advisers

1. Identify customer needs: Understand the specific motivations behind your clients’ interest in later life lending. Whether it’s home improvements or mortgage repayment, knowing their goals will help you offer the best advice.
2. Focus on flexibility: Emphasise the flexibility of equity release as a later life lending solution. Homeowners have options to ensure that their solution will work for them, such as the ability to choose a Drawdown product or to make partial repayments+
3. Explain LTV ratios: Ensure your clients understand the importance of LTV ratios and how a conservative approach can protect their long-term financial health.

Encouragement to explore options

If you have clients considering equity release this festive season, you can guide them to explore a range of flexible options available and understand how they can unlock the value in their homes to enjoy a more financially secure retirement. By providing detailed, personalised advice, you can help them make the most of their property wealth during the holidays and beyond.

Equity release can be a powerful tool to improve quality of life, offering peace of mind and financial stability if it is appropriate for a homeowner. As advisers, our role is to guide clients through this process, ensuring they make informed decisions that align with their personal and financial goals.

We invite you to contact us for further information and support in helping your clients navigate their equity release options this Christmas season. Together, we may be able to make a meaningful difference in their lives, providing the financial flexibility they need to enjoy a joyful and stress-free holiday period.

Statistics taken from Responsible Review Demographics Power BI Report. (2024). Overview of Applicant Demographics by Application Date and Lender (RLER). Retrieved 12.11.2024.

“Royal London Equity Release” is a trading name of Responsible Lending Limited.  Responsible Lending Limited uses Royal London branding under licence from Royal London Marketing Limited.  “Royal London”, the “Royal London logo” and “Royal London Equity Release” are registered trademarks of The Royal London Mutual Insurance Society Limited. Responsible Lending Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register under reference 763158.  Registered in England and Wales under company number 09801855.  Registered office:  Princess Court, 23 Princess Street, Plymouth PL1 2EX.  Responsible Lending Limited is a wholly owned subsidiary of the Royal London Group.  Being a wholly owned subsidiary of the Royal London Group does not alter Responsible Lending Limited’s regulatory responsibilities.