Looking at the behaviour of its customer base, Pure Retirement found that releasing equity for non-essential purposes was the main motivation for people who had lump sums, drawdown plans and further advances.
Nearly a quarter (24 per cent) of new borrowers released equity for home improvements, the most popular reason. This was up from 22 per cent on last year. Repaying the mortgage or debt was the second most popular use of equity release, despite a drop from 22 per cent to 21 per cent annually.
Releasing funds for a holiday rose from the fifth most popular use last year, to the third in 2023. Pure Retirement said this was a sign of improved customer confidence.
Further pointing to the use of equity release for lifestyle purposes, car purchases were also the top five main reasons for a lifetime mortgage.
Drawdown and further advance customers
Among drawdown borrowers, home improvements were also the most popular reason for releasing equity. Two-fifths of borrowers used their loan for this purpose, however it was down from a share of 46 per cent of borrowers last year.
Holidays were the second most popular use of released equity, although the share of borrowers using it for this reason fell by two per cent annually.
Releasing funds to cover living expenses was the third most popular reason while buying a car fell from the the third place to the fourth.
For further advance borrowers, home improvements were again the most popular reason for releasing equity.
Holidays rose from the fourth most popular use to the second, while creating an emergency fund and paying off debts respectively remained the third and fifth most popular uses.
Lifetime mortgage borrowers are still using their released funds for gifting purposes, Pure Retirement found.
This was the fourth most common reason for new borrowers, the fifth for drawdown customers and the fourth for those taking out further advances.
Scott Burman (pictured), head of distribution at Pure Retirement, said: “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.”