Key Takeaways
- Equity release is like a financial booster shot for the UK economy, injecting much-needed cash that gets people spending and businesses investing.
- Imagine unlocking all that cash tied up in homes; it’s a great way to get the economy buzzing with more consumer spending and investment.
- It’s a win-win, really. Not only does it help folks in their golden years, but it also keeps the property market lively and might even save the government a buck or two on elderly care.
- This move has a ripple effect on the UK’s financial scene, shaking up property prices, giving the retirement finance sector a leg up, and changing how people spend their money.
- While it’s great for ramping up spending, there’s a bit of a tightrope walk here. If house prices take a dive or too many people can’t keep up with their plans, it could rock the boat for the UK economy.
Equity release has done more than just allow retirees to unlock capital for their retirement; equity release boosted the UK economy by £3.8bn in GVA1. Now that’s pretty impressive!
With the ever-growing interest in equity release products, you may be keen to discover just how crucial a role it plays in the economy.
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UK Economy Boosted by £3.8bn in GVA from Equity Release – L&G
A new report by Legal & General and the Centre for Economics and Business Research (CEBR) has revealed the true impact of equity release on the economy.
Typically, only the direct impact of equity release on homeowners gets the necessary attention, but what about the economy?
Well, according to the report, senior homeowners directly added nearly £1.8bn in GVA (gross value added) through releasing equity.
Additionally, spending funded by equity release amounted to approximately £1.1bn, while “induced effects on GVA” amounted to an estimated £0.9bn.
That brings the total impact of equity release on the UK economy to a whopping £3.8bn!
Let’s take a closer look at the statistics and how equity release funds were directly spent per sector:
- Wholesale & retail trade: £757 million
- Human health & social care: £517 million
- Information & communication: £444 million
- Construction: £417 million
- Arts, entertainment & recreation: £368 million
- Real estate activities: £356 million
- Overseas holiday spending: £330 million
- Financial & insurance services: £328 million
- Education: £283 million
- Transportation & storage: £248 million
- Accommodation & food: £203 million
- Other service activities:£49 million
The Ripple Effect of Equity Release Spending
While the numbers above relate only to the direct spending per sector, there’s also a need to consider the ripple effect of the direct spending.
There are several equity release uses that retirees tend to unlock capital for, with home improvements and vacationing being popular ones.
When we consider the other players and supply chains in these sectors, it brings us to the ripple effect of direct spending.
The accommodation and food sector, for example, includes chefs, waitrons, and hospitality personnel, to name a few. They all benefit from direct equity release spending.
Similarly, home improvements can’t be carried out without the relevant contractors.
Equity release is evidently a key contributor to job creation and spurring economic activity in the UK.
More than 45,000 jobs were generated from equity release direct spending, while an estimated 35,000 jobs were supported through the ripple effect of equity release spending.
Now the question on everybody’s mind is, will things continue on this positive trajectory in years to come?
Common Question
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In Conclusion
Equity release has undeniably become a hot topic in recent years.
Rightfully so, as more people are turning to it to fund later life.
With the UK economy being boosted by £3.8bn in GVA from equity release, it’s clear to see that it contributes to economic growth while allowing many across the UK to access property wealth!