Over-55s tap equity release to fund holidays as Covid restrictions ease
The number of lifetime mortgage customers using cash for holidays has tripled as pandemic restrictions on travel have eased.
Equity release drawdowns to fund trips away surged at the start of 2022 from the same period in 2021, according to data from Legal and General Home Finance.
One in five customers used cash for travel at the start of this year, compared to only 7% a year ago.
Borrowers using money to buy a car also jumped by two thirds year-on-year, which shows a return to “aspirational spending”, L&G said.
Health is also front of mind for customers as drawdowns for health and medical purposes doubled.
However, the cost of living crisis could impact spending habits among those taking equity release in the coming months, L&G said.
Craig Brown, chief executive of L&G Home Finance, said: “As pressures, such as the pandemic, may have affected finances, the home is a valuable asset which can play a key part in supporting retirement, whether that is aspirational spending or helping younger family members who may have faced financial difficulties.
“The rest of 2022 is set to bring a new range of challenges, as cost-of-living concerns hit households across the country, and we anticipate that people might seek out lifetime mortgages for different reasons in light of such pressures, for example for gifting purposes or to boost their retirement income.
“The data shows that even as the cost of living crisis looms, customers have been using lifetime mortgages for aspirational spending. We emphasise the importance for people to look ahead and to plan and budget for their needs, goals and later life priorities.”