The UK economy was bolstered by more than £7 billion in 2017 thanks to Britain’s older homeowner’s releasing equity for retirement, according to new research from Legal & General Home Finance and the Centre for Economics and Business Research (CEBR).

Lifetime mortgages – a form of equity release – have seen a surge in popularity in recent years and are becoming the fastest growing sector of the mortgage market. So much so, cash accessed by equity release contributed up to £7.1 billion to UK gross output, according to the lifetime mortgage lender’s ‘Silver Spenders’ report.

Sales in lifetime mortgages tripled between 2013 and 2017, rising from just over £1 billion to more than £3 billion last year, the Equity Release Council found.

The research analysed the indirect, current direct and induced impact of the equity released from homeowners’ properties on the UK economy. It found that for every £1 of housing wealth accessed through equity release products, £2.34 is generated for the British economy.

Chris Knight, chief executive of Legal & General Retirement Retail, said: “It’s no secret that lifetime mortgages have been growing in popularity in recent years, but as more and more Britons decide to access the cash tied up in their homes for retirement, no one has yet asked the question about the impact this newly unlocked equity is having on our economy.”

“Not only are these older homeowners accessing equity that would otherwise have remained locked up in their properties, whether for a holiday or a home renovation, but these funds are filtering through the economy as well.”

“That is boosting the spending power of our businesses, generating jobs and spurring economic growth across the UK.”

The manufacturing industry benefits the most from equity release spending at £1.32 billion, while the construction sector benefits from a £349 million injection – the equivalent annual salaries of 14,000 construction workers or 11,400 electricians.

Equity release spending also supported health and social work, boosting the sector by £203 million – the equivalent of 7,500 nurses, 3,200 doctors or 9,600 community workers.

Legal & General’s research found that the actual number of jobs created by equity release spending amounted to 37,100 jobs directly and indirectly across the UK, and is likely to grow significantly over time.

As part of the research, Legal & General asked over 2,500 consumers about their opinions on accessing property wealth in retirement. Only 3% of Britain’s homeowners said they had released equity, while 18% said they would consider accessing their housing wealth via a lifetime mortgage in the future and a further 3% said they had considered doing so in the past.

This means 24% of UK homeowners – or 3.4 million households – are open to the idea of accessing their property wealth in retirement.

Knight continued: “With longevity increasing and awareness about lifetime mortgages growing, the role of equity release and its contribution to the national economy is set to grow further. Last year saw the sector surpass £3 billion and a £5 billion plus market is a strong possibility by 2020.”

“But there is an estimated £1.5 trillion of property wealth is in hands of Britain’s over-55s, so there is the potential for retirees and their housing equity to play a much bigger role in boosting UK GDP in years to come.”