- Clearing an existing mortgage was the top reason homeowners released equity from their homes last year
- 28% used it to make home improvements and 17% used it to fund day-to-day living
- The number of applicants hoping to fund a holiday rose by five percentage points to pre-pandemic levels
Clearing an existing mortgage remains the top motivation for releasing equity (41%) for the sixth year running according to new data from Canada Life. Funding home improvements secured the second spot, with 28% of customers citing this as their main reason.
However, despite maintaining their top positions, both categories decreased in popularity compared to 2022. The number of customers using equity release for existing mortgage repayments fell by eight percentage points (from 49% in 2022 to 41% in 2023), while funding home improvements dropped by three percentage points (from 32% in 2022 to 28% in 2023). The number of customers taking out equity to help with day-to-day costs also fell, from 20% in 2022 to 17% in 2023.
The analysis also shows a rise in the number of applicants looking to release equity to fund holidays. In 2022, 15% of applications were to pay for trips, but this increased to 20% in 2023 - now sitting at pre-pandemic 2019 levels when 21% were for holidays.
The top five reasons for releasing equity in 2023 were as follows:
|
|
2023 |
2022 |
2021 |
|
1. |
Clear existing mortgage - 41% |
Clear existing mortgage - 49% |
Clear existing mortgage - 46% |
|
2. |
Home improvements - 28% |
Home improvements - 32% |
Home improvements - 34% |
|
3. |
Holidays - 20% |
Day to day living - 20% |
Day to day living - 19% |
|
4. |
Day to day living - 17% |
Consolidate unsecured debt - 16% |
Consolidate unsecured debt - 18% |
|
5. |
Consolidate unsecured debt - 16% |
Holidays - 15% |
Buy a new property - 15% |
Sadna Zaman, Proposition Development Manager, Home Finance, Canada Life said: “Customers are continuing to use equity release for a wide variety of reasons, from home improvements to paying off existing mortgage borrowing. Day-to-day living remains within the top five reasons for releasing equity, with homeowners using the wealth they have built up in their properties to potentially offset increased outgoings thanks to the cost-of-living crisis.”
“The variety of motivations for releasing equity highlights the flexibility and accessibility of the options available, allowing homeowners to enjoy their retirement in a way that best suits them and their families. However, equity release is a lifelong financial decision, so it’s vital that the long term costs are considered.”
ENDS
Notes to editors:
- Canada Life’s Home Finance Reasons for Loans data, 2019 - 2023
- Customers were able to choose multiple options for their reasons for loans.
Enquiries:
Press enquiries should be directed to:
Lizzie Murray, Vested, 07914 698 310, canadalife@fullyvested.com
Elle McAtamney, Canada Life, 07913 568213, elle.mcatamney@canadalife.co.uk
About Canada Life
Canada Life is part of a group of companies controlled by Great-West Lifeco Inc., a diversified financial services holding company headquartered in Winnipeg, Canada. Through its subsidiary companies, Great-West Lifeco has operations in Canada, the United States, and Europe. Great-West Lifeco and its insurance subsidiaries have received strong ratings from major rating agencies. Great-West Lifeco has over 38 million customers worldwide and £1.532trillion assets under administration (as at 31 December 2022).
Canada Life Limited began operations in the United Kingdom in 1903 and looks after the retirement, investment and protection needs of individuals and companies alike. As well as providing stability and security through its individual contracts, Canada Life Limited has grown and maintained its position as the market leading provider of group insurance solutions.1 Canada Life acquired Retirement Advantage on 3rd January 2018 for an undisclosed sum. The acquisition added over 30,000 retirement income and equity release customers and more than £2 billion of assets under management including a £1.5 billion block of in-force annuities to Canada Life.
Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority. Canada Life International Assurance Limited and Canada Life International Assurance (Ireland) DAC are authorised and regulated by the Central Bank of Ireland.
Stonehaven UK Limited, registered in England and Wales no. 05487702. Registered office: Canada Life Place, Potters Bar, Hertfordshire EN6 5BA.
Stonehaven UK Limited is authorised and regulated by the Financial Conduct Authority.
- Canada Life MI & Swiss Re, 2022