New data from U.K.-based financial services firm Legal & General shows that as many as 11% of all couples over the age of 50 use their real estate wealth — either through the proceeds of a home sale or a home equity release product — to finance the costs of divorce.
“The research, which explored the financial impact of divorce in later-life, also revealed that property wealth is the most important consideration for most couples at the point of divorce,” the organization found. “For many over 50s, property wealth is their most significant financial asset, with people over 55 holding the majority of housing wealth in the UK, totalling more than £3.5 trillion in property assets alone.”
That figure comes out to roughly $4.4 trillion in U.S. currency, a figure that pales in comparison to the estimated $14 trillion in 17 trillion in home equity held by older U.S. homeowners. But the U.K.’s population of 68 million as of 2023 is also much smaller than the U.S. at 334 million.
The data came from opinion research conducted between October and November 2024, and if features 2,945 online interviews with divorced U.K. adults.
While as many as 18% of respondents indicated they would seek to buy out their partner using savings, about one in 20 couples turn to “equity release” products like reverse mortgages to remain in their homes.
While the data is focused primarily on the U.K., Europe has shown willingness to explore the proliferation of equity release products, including local variations of reverse mortgages. Previous research from L&G in 2022 indicated that one-third of all non-retirees (35%) had less than £10,000 (approximately $12,450 USD) in their pension account but owned a property, offering a potential avenue for tapping accrued equity.
In 2021, U.K.-based equity release professionals offered data on the trend of home equity implementation in retirement to a virtual audience at the National Reverse Mortgage Lenders Association (NRMLA) Annual Meeting. They described a report detailing how the sentiment about equity release in retirement appears to be improving across Europe.
In the U.S., reverse mortgage industry professionals have long touted the product as one that could help facilitate so-called “gray divorces” that occur with couples 50 and older.
Last year, Finance of America (FOA) vice president of retirement strategies Steve Resch told HousingWire’s Reverse Mortgage Daily (RMD) that many of his colleagues in the financial planning space had been increasingly dealing with issues of gray divorce.
“Another opportunity is the H4P,” Resch said in May. “Planners often don’t realize that they can use that, and many of us are now dealing with gray divorce scenarios. Another scenario where this really comes in handy is relocation.
“A lot of people have moved to Florida, and when one spouse dies, they move back to be near family,” he added. “So, I think there’s a huge opportunity there. Gray divorce, eliminating that mortgage payment and managing long-term care risks — those are really, in my mind, the biggest opportunities [for the reverse mortgage industry].”
