Lifetime mortgage borrowers were split between increasingly looking to release cash “for more aspirational reasons” and more basic needs over the first six months of the year, according to data from Pure Retirement.
Releasing funds for a holiday has risen to the third most popular reason for new customers to release equity this year from the fifth most popular reason in 2022, a study from the equity release lender points out.
It says this, “points to increasing customer confidence and willingness when it comes to using released equity for lifestyle means – a fact backed up by car purchase remaining among the top five uses of funds year-on-year”.
This trend is seen across various types of later life lending such as initial advances, cash releases on drawdown plans, and additional borrowing via further advances.
However, among new customers, home improvement remains the most popular reason for equity release, rising to 24% of applications this year from 22% in 2022.
While mortgage and debt repayment remains the second-most popular reason year-on-year, though in this instance dropping slightly to 21% from 22% 12 months ago.
But releasing cash to cover living expenses is the third most popular reason for a later life loan, “pointing towards existing equity release customers electing to use their reserves for more day-to-day reasons,” the survey points out.
Pure Retirement head of distribution Scott Burman says: “These latest figures point both to the changeable nature of the market, and to the diverse customer base the later life lending sector currently serves.
“While staples such as home improvements and debt repayments have remained popular, the rising consumer interest in things such as holidays demonstrates the wide array of lifetime mortgage uses and increasing customer confidence to use released funds for these means.
“On the flipside, we’re also seeing a rise in people using their drawdown facility for day-to-day living expenses, highlighting the need for continued product innovation to ensure ongoing later life lending solutions that are able to meet a variety of circumstances and needs.”
