Equity release demographics are shifting, revealing younger customers dominating the market. Recent analysis by Pure Retirement highlights significant changes in customer profiles and preferences. Particularly noticeable is the shift towards younger individuals below 70 years of age for equity release. Additionally, drawdown plans are gaining popularity over lump sum options. Gender dynamics also show more single female applicants in the sector.
In the constantly evolving landscape of equity release, a notable trend has emerged, with younger individuals increasingly opting for these financial products. Analysis from Pure Retirement illustrates a significant demographic shift, with under-70s now making up 59% of new equity release activity, up from 43% the previous year. This marks a pronounced change in the age profile of lifetime mortgage customers, underscoring a broader appeal to a younger audience.
The analysis further compared data across quarters and years, revealing a reduction in equity release business from individuals aged over 75. This group now comprises 15% of the market, down from 31% a year ago and 23% in the previous quarter. Concurrently, the average age of new lifetime mortgage customers has decreased to 68 years.
Another significant aspect of this shift is the rising preference for drawdown plans over traditional lump sum plans. For the first time, drawdown plans were chosen by 51% of new customers in the third quarter. This is a substantial increase from 41% a year ago and 46% in the previous quarter, indicating a strategic preference shift among customers seeking more flexible financial arrangements.
Gender dynamics in equity release are also evolving. Among single life applicants, women now represent 70% of this demographic, compared to 64% a year ago and 67% in the previous quarter. This increase highlights the growing participation of single female applicants in the equity release market, suggesting a wider acceptance and reliance on these products among women.
Despite these demographic shifts, the overall usage of released funds remains consistent both on a quarterly and annual basis. The distinction between drawdown and lump sum customers is notable, as the former are primarily utilising funds for needs-based reasons, double the proportion seen in drawdown customers year-on-year. Interestingly, 15% of drawdown customers allocate funds for holidays, a trend absent among the top five usages for lump sum customers throughout 2024.
These demographic and preference shifts indicate a dynamic evolution in the equity release market, suggesting new opportunities and challenges ahead.
