Grandparents and parents have gifted over £2.1 billion to younger relatives since the start of January 2020, data from Key Later Life Finance shows.
This amounts to nearly a fifth (17%) of the total £12.1 billion released, suggesting that supporting family members has become a key focus for equity release customers.
Over-55s in London were able to gift the most (£168,688) followed by those in the South East (£88,588), largely driven by the significant house price growth across the region.
Those in the South West gifted on average £65,636, while customers in Northern Ireland gifted £33,324 and those in the North East gave an average £41,483.
The equity release specialist said Londoners also receive the earliest inheritance, with families more likely to gift if possible in order to help younger family members on to the housing ladder.
Of those customers opting to use equity release in the third quarter of this year, 43% said it was for help with a house deposit. Repaying debts was also another key reason (10%), while others turned to equity release for practical support, including helping with university fees (6%), purchasing a new car (5%) and paying toward a wedding fund (6%).
Will Hale, CEO of Key said the figures highlight the desire among older homeowners to help their wider family.
“Even though the cost-of-living crisis is being felt across all age groups, over-55s homeowners remain keen to share the benefits of sustained house price growth with their wider families to help them achieve their dreams when it will be most beneficial. This is no small thing and the type of every day intergenerational fairness that comes naturally to many people.
“However, while as a parent or grandparent, you want to help younger members of the family, it is vitally important that you consider the implications of this gift on your own finances. Especially in this inflationary environment just the cost of meeting day-to-day living expenses can increase quickly over time.”
Hale said homeowners also need to consider unexpected costs or loss of income through ill health and said people considering equity release should explore all their options including downsizing, equity release and other later life lending products.
“Equity release products are more flexible than they have ever been and allow ad hoc capital repayments as well as ongoing interest repayments so any borrowing can be carefully managed but the choice needs to work for all members of the family – both young and old,” Hale added.
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