A quarter of new customers used the released funds for home improvements, which is a two per cent increase on the prior quarter.
According to equity release specialists Pure Retirement, looking at overall advance trends for lifetime mortgages, this trend could show a “greater willingness to stay in their current property amid property and mortgage rate movements over the past twelve months”.
Debt and mortgage repayments represented 23% of new applicants, a 1% increase on the prior quarter and a 1% fall year-on-year.
Holidays are the third most popular loan use, comprising 10% of initial advances.
Gifting and buying a new car represented 10% and 9% respectively.
Looking at lump sum plan applicants, debt and mortgage repayment is the most popular reason for taking out a lifetime mortgage at 29%. This is up 2% compared to Q3 and one per cent year-on-year.
Pure Retirement said that consumers wanted to “use their released funds to clear existing responsibilities and eliminate monthly repayments”.
Home improvement came second at 23%, with gifting representing 11%. Car purchases took out a lumpsum lifetime mortgage at 9%.
Home improvements top for drawdown
Within drawdown plans, home improvements represented 27% as a proportion of loan volume, with debt and mortgage repayments coming to 16%.
Holidays came to 13% and car purchases comprises 9% and gifting was unchanged at fifth place.
Pure Retirement’s CEO Paul Carter 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 lump sum 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.”
