Divorce is a growing phenomenon in the UK. In England and Wales in 2021, there were 113,505 divorces, which represents a 9.6% increase from the previous year. The vast majority of these divorces were between straight identifying couples, with gay divorces accounting for just 1.4%.
One effect of divorce that isn't widely discussed is the impact that it can have on equity lending, and the way that males and females are affected differently. This is particularly noticeable in straight relationships.
It's easy and quick to see how much you could receive, with the help of an equity release calculator. This is the option that many divorcees resort to. But what can divorced men and women expect to get, and how do their purposes differ?
Women divorcees are more likely to use housing equity
Research in 2022 by Key Later Life Finances highlighted a stark disparity between the males and females. Around three times as many women end up releasing equity from their homes than men do. The researchers point to a gradual increase in the proportion of divorced customers, which rose from 10% in 2019 to 12% in 2022. In 2019, the gender balance was even more skewed, with women making up 74% of applicants.
This particular period is significant, as the law was changed in 2020 to allow for 'no fault' divorces. The change helped to make this area of law a bit more approachable, with arcane terms like 'decree nisi' being changed to the slightly more comprehensible 'conditional order'.
This allowed couples to jointly file for divorce, and replaced the old 'five grounds' system with a new one. The upshot of it is that couples can now separate much more easily (and, in theory, amicably). That we see this change reflected in equity release markets shouldn't come as much of a surprise.
Why do divorcees take out equity release?
The research shows that men and women have different priorities when it comes to spending. Divorced women tend to use more of the money for gifts (16% versus 9%) and home improvement (41% versus 31%).
Perhaps unsurprisingly, divorces on both sides are more likely to use housing equity for debt repayment. But the number is significantly higher for divorced men. Around 33% of couples taking out equity release are interested in paying off debt, but for divorced men it's 69%. For divorced women, the figure sits at 59%.
Interestingly, divorced men are less likely to take out equity releases for home improvement than couples are. This might suggest that they're less interested in the way that the house looks, or that they already have the disposable income to fulfil their needs in this area.
The CEO of Key Later Life Finance, Will Hale, believes that these recent trends are just a small part of a larger, long-term one. "Over the last few years, we have seen an increase in divorcees using equity release with more women than men choosing to access their housing equity," he said. "With the most recent ONS data highlighting that divorce amongst those aged over 65 has increased by 46% year on year and no-fault divorces now a reality, the number of divorcees who consider this option is only likely to increase."
While it is never nice to think about your marriage ending in divorce, planning early and being prepared for all outcomes is the best way to head into any marriage.
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