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Equity release set to rise, but cost-of-living crisis puts the brakes on luxury spending

Posted in: Corporate

  • Equity release is set to grow, driven by rising house prices, with 19% of over-50s currently considering the product
  • Five percent of over-50s have already taken an average of £46k out of the value of their property in the past year
  • But a spending divide remains, with the cost-of-living crisis leading some to be nervous about putting money towards luxuries (56%) while many are keen to see the world again (54%) post-Covid
  • Meanwhile, providers recommend caution to anyone considering using equity release as a means to cover shortfalls caused by the cost-of-living crisis.

The rising cost of living has been affecting over-50s in varying ways in recent months and with many reporting nervousness around spending, a divide has emerged in terms of what equity release money is likely to be put towards.

Most are still planning to go on holidays in the coming year (54%), with equity release cash potentially going towards this expenditure . But while many are looking to make up for lost time after travel restrictions (31%), others intend to postpone trips due to the recent resurgence in Covid numbers (44%). This suggests that some planning to take out equity release for a trip may just be waiting for the right moment to do so.

Overall, 56% say they are currently nervous about spending on luxuries due to the cost-of-living crisis. Driving this, 32% have seen their savings drop over the last 12 months as they cope with increased costs. On average, those who saw their savings decrease saw a shortfall of £6,297. Meanwhile, 8% have run out of savings entirely.

As a result, there are concerns that some people could look to use equity release to help cope with day-to-day costs caused by the cost-of-living crisis. More than a quarter (26%) of over-50s say that they are glad that they could fall back on equity release if needed.

Matthew Ellis, Head of OneFamily Advice, said: “With rising house values, tens of thousands have turned to equity release to allow them to enjoy more leisure experiences, renovate their homes or to pay off debts that will improve their financial situation in the long-term. In some instances, equity release is enabling people to make adaptions to their property that will allow them to stay in the familiar surroundings of their own home rather than having to downsize to a retirement flat.

“However, equity release isn’t right for every situation, and we would recommend caution in using it as a means to cover shortfalls caused by the cost-of-living crisis. But speaking to a specialist equity release adviser is always an essential first step in understanding whether equity release can help in reducing their money worries and making their lives more comfortable.”

Notes to Editors

Unless otherwise stated, all research conducted by Opinium, on behalf of OneFamily, between 15th – 19th July 2022, among a nationally representative sample of 2,000 over-50s.

About OneFamily

OneFamily is a customer-owned financial services company that offers lifetime ISAs, lifetime mortgages, junior ISAs, child trust funds, bonds and over 50s life cover.

We have 45 years’ experience of being a trusted provider of financial solutions, with 2.5 million customers and £7.8 billion in funds under management at the end of 2020.

We are the UK’s biggest child trust fund provider, holding over 25% of the market.

Supporting our members and their communities

As a mutual, OneFamily is owned by its members for its members – and doing right by them is at the heart of our business.

We don’t have shareholders to pay dividends to, so we reinvest our profits to provide quality products and services for the benefit of our members. OneFamily has provided more than £4 million in grants since 2015 through its personal and community-based funding initiatives – improving the lives of over 350,000 people in the UK. These awards have supported dementia charities, homeless projects and provided work for young people with learning disabilities as well as funding projects such as the renovation of swimming pools and parks.

OneFamily customers can also apply for a Young Persons Education Grant of up to £250 to help them or someone, aged 15-19, they care about. They can be used for study materials, to travel costs or a new laptop.

For more information on how we support our members see: