Happy Holidays! Lifetime mortgage funds fuel trips of a lifetime

Lifetime mortgage fund usage continues to show a mixture of aspirational and needs-based borrowing, according to figures from lender Pure Retirement. And the data indicates a clear difference in priorities between those taking out lump sum and drawdown plans.

Overall, 25 per cent of new customers used the released funds for home improvements, representing a rise compared to Q3 2023 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 12 months.

Debt and mortgage repayments also continue to feature strongly, with 23 per cent of applicants stating this as their primary reason for taking out funds. This is relatively static, representing a one per cent rise compared to Q3 2023 and a one per cent reduction year-on-year. 

Holidays have risen to the third most popular loan use among applicants, with 10 per cent 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 10 and nine per cent 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 lump sum plan applicants, debt and mortgage repayment is easily the most popular reason for taking out a lifetime mortgage, at 29 per cent, 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 lump sum applicants releasing funds for this purpose. Gifting, meanwhile, is the third most popular reason at 11 per cent; car purchases have risen to the fourth most popular reason to take out a lump sum lifetime mortgage with gifting fifth. 

Pure Retirement chief executive Paul Carter says: “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.”