Despite ongoing wider socioeconomic uncertainty, lifetime mortgage fund usage continues to show a mixture of aspirational and needs-based borrowing, according to figures from lender Pure Retirement.
Overall, 25% of new customers used the released funds for home improvements, representing a 3% rise compared to Q3 2023, and a 2% uplift compared to Q4 2022, where it was beaten to the most popular use of released funds by debt and mortgage repayment.
This potentially points to an even greater willingness to stay in their current property amid property and mortgage rate movements over the past twelve months.
Debt and mortgage repayments also continue to feature strongly, with 23% of applicants stating this as their primary reason for taking out funds.
This is relatively static, representing a 1% rise compared to Q3 2023, and a 1% reduction year-on-year.
Holidays have risen to the third most popular loan use among applicants, with one in 10 (10%) now using new initial advances to fund new experiences and rising from the fourth-place year-on-year and quarter-on-quarter.
Gifting and buying a new car round out the top five, with a proportion of 10% and 9% respectively – gifting fell by one position in the top five loan usage reasons quarter-on-quarter and year-on-year, while car purchases remained static.
Among lumpsum plan applicants, debt and mortgage repayment is easily the most popular reason for taking out a lifetime mortgage, at 29% (up 2% quarter-on-year, and 1% year-on-year), with consumers seemingly wanting to use their released funds to clear existing responsibilities and eliminate monthly repayments.
Home improvements still sit second in the rankings, with just under one in four lumpsum applicants (23%) releasing funds for this purpose.
Gifting, meanwhile, is the third most popular reason at 11%, – the highest it sits among initial advance trends –remaining constant in terms of proportion both quarter-on-quarter and year-on-year.
Car purchases have risen to the 4th most popular reason to take out a lumpsum lifetime mortgage at 9% as a proportion of loan volume, up 2% both quarter-on-quarter and year-on-year, with gifting falling to the 5th most-popular reason and remaining static at 8%.
Paul Carter (pictured), CEO at Pure Retirement, said: “It’s gratifying to see the diverse range of uses that the modern lifetime mortgage applicant is using their home’s equity to fund, which has undoubtedly contributed to the sector’s ongoing resilience.
“Whether it’s for debt repayment to give them greater future financial freedoms, helping their families, or achieving aspirations such as home improvements, cars and holidays, these latest figures highlight the ways that those in later life are taking advantage of their assets to achieve their – or their loved ones’ – financial goals in later life.
“The varied data, as well as the differences between lumpsum and drawdown customers, highlights the need to ensure we keep offering a suite of products to suit a diverse range of needs, and it’s something we recognise and are continually working to at Pure Retirement.”
