Over four in ten new lifetime mortgage customers are utilising funds for home improvements or debt repayment, according to the latest figures from Pure Retirement.
Despite a challenging backdrop marked by tentative inflationary slowdowns, customer behaviours in the third quarter (Q3) reveal a consistent pattern of equity release, balancing between ambition and necessity.
The lender’s data indicates that 22% of lifetime mortgage borrowers sought to finance general home enhancements, matching the proportion of those consolidating debts.
This trend persists as the foremost reason for equity release, even as home improvement-related loans witnessed a marginal 2% decline from the second quarter (Q2). Debt repayment, however, maintained its position without fluctuation.
Gifting has seen a rise in popularity, ascending to the third most common use of released funds, with 9% of new customers in Q3 indicating this choice, a modest increase of 1% from the same quarter in the previous year.
This stability in gifting’s appeal is potentially linked to the ongoing high residential mortgage rates, driving families to support relatives in accessing the housing market.
Despite the economic headwinds, aspirational spending on cars and holidays persists, with holidays accounting for 9% of initial advances, although slipping from third to fourth place compared to Q3 2022 and Q2 2023.
Vehicle purchases marked an 8% share, reflecting a nuanced 1% rise from the previous year but a 1% decrease from Q2 2023.
John Wilson, chief commercial officer, said: “The diverse usage figures underline the development shown across the sector in recent years that have helped ensure that lifetime mortgages offer an effective solution suitable for a variety of needs and have helped to create a resilient market.
“Additionally, the figures also validate our own product development strategy to create a range of lifetime mortgages to suit differing customer circumstances, and we look forward to continue to do so for the rest of the year and into 2024.”
