The financial market is undergoing another period of substantial change by way of the cost-of-living crisis. This comes with the market still reeling from the aftermath of the pandemic, with homeowners’ finances particularly stretched given the financial complications of recent times.
As a result, many homeowners are looking to innovative ways they can up their cash reserves in order to fund the increases on their monthly repayments.
“This year is bringing new challenges, as cost-of-living concerns hit households across the country,” said Craig Brown (pictured), chief executive of Legal & General Home Finance.
Brown explained that the firm’s equity release drawdown data is a good indication of how people are responding to this challenge.
“In the first six months of the year, we have seen more people turning to their property to supplement their income, when compared to the same period last year,” Brown added.
Research collected by Legal & General shows that equity release drawdowns for holidays and travel more than doubled in the first half of 2022 when compared to the same period in 2021. As such, it revealed that rising living costs have seen lifetime mortgage customers increasingly turn to property wealth to supplement their income and continue to meet their goals.
“Gifting also remains popular, with the Bank of Mum and Dad stepping in to help children on to the housing ladder or to help younger family members facing financial difficulties,” Brown said.
Legal & General’s recent Equity Economy report, conducted with the Centre for Economics and Business Research (CEBR), found that people are increasingly making the most of property wealth.
The report outlined that equity release funds £1 in every £90 spent by retired people within the UK currently, and it forecasts that the equity release market will surpass £12 billion in 2030.