Have there been changes in the age profile of a lifetime mortgage customer?
It's indisputable that the average age of lifetime mortgage customers has become younger. Looking at our data, it's noticeable that between 2019 and 2024, this key metric has reduced from 75 in 2018 to 69 in the first half of this year, marking the first time it's been under 70.
When we analyse our data in more granular detail, we see that the proportion of equity release customers aged between 60 and 70 is the highest it's ever been, while the proportion of applicants aged 75-85 is at its lowest. Key headlines include:
- Nearly one in five (19%) of customers in H1 2024 were aged 60-64 - a new high, and up from 7% in 2019
- Nearly one in four (24%) of customers are aged 65-69
- While one in five (19%) of customers are aged 75-79 in H1 2-24, this is a marked reduction compared to this demographic's high of 28% in 2019
Does age affect reasons for borrowing?
Unsurprisingly, the younger age brackets use lifetime mortgages for more needs-based borrowing. Our loan usage data highlights that the primary reason for under-65s to release equity from their homes is to repay mortgages and debts, which has remained at around 30% consistently since 2019.
This is twice as high as customers aged over 75, which has consistently sat at around 15% over the same timeframe. The primary reason this particular audience releases funds is home improvements, with gifting also featuring strongly and sitting at similar levels to debt and mortgage repayment.
What trends have been observed among the property values of equity release customers?
In H1 2024, the average house price among our new lifetime mortgage customers was just under £416,000, the second highest on record following the 2021 highpoint of £420,700. This represents a 3.3% increase year on year (and a net increase of 2.2% once wider house value shifts are taken into account).
Looking at the breakdown, the most common new customer property value is in the £250,000-£399,999 bracket, accounting for nearly one in four (38%) of new customers - the highest this particular value bracket has ever been. On the flipside, the proportion of new business coming from owners of properties valued at under £250,000 is at its lowest, decreasing from a high of 43% in 2019 to 24.4% so far in 2024.
Looking at the proportion of business coming from owners of higher-value properties, lifetime mortgage customers who own properties of at least £550,000 currently account for just under one in five (19%) of all new plans. This is holding steady compared to the 2021 high of 21% and significantly up on the 2019 low of 13%.
Does house value affect usage patterns?
It would be easy to assume that owners of lower-value houses would be releasing funds for more needs-based reasons. However, among owners of properties valued at under £250,000, home improvements have been the most common reason for taking out a lifetime mortgage.
While debt and mortgage repayments have sat in second place over the same period, gifting, holidays, and cars have rounded up the top five, suggesting that it's overly simplistic to suggest that owners of lower-value homes turn to equity release as a product of last resort.
Indeed, looking at applications from owners of properties of at least £850,000 shows that while gifting has historically been the most common reason to release funds in both 2019 and 2021, in 2023 and 2024, the number of people using lifetime mortgages for this purpose has halved to 12%, and debt and mortgage repayments have replaced it as the most common usage (up to a high point this year of 27%).
What else have we found out?
Lump sum continues to be the preferred plan type among our customer base, accounting for 53% of completed cases in the first half of the year. However, this is the lowest share in our data history (which peaked at 65% in 2021), showing that people are increasingly willing to explore the flexibility afforded by drawdown plans.
Additionally, we found that 58% of completed cases over the first half of 2024 have been on a joint lives basis, while among single life applicants, 67% are female - this represents a 3% increase compared to 2023 and brings it in line with the proportions seen in 2021.
