Pepper Money conducted a survey that showed that while 63% of credit card holders had made a significant purchase with their card in the past, just 36% would use this credit for a large purchase in the future.
Meanwhile, a third of homeowners said they used a mortgage to fund a large purchase, but just 18% would rely on this credit in the future.
Some 14% of respondents said they had used second charge loans for significant purchases in the past, while 17% said they would consider this finance for their future purchases.
By contrast, a quarter would use a personal loan.
Pepper Money said the shift towards long-term secured borrowing was a result of uncertainty in the economy, suggesting that homeowners wanted certainty over monthly repayments.
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The survey of more than 2,000 people also indicated that homeowners were open to leveraging the value of their home to access larger loans, which Pepper Money said was a sign of a change in how people viewed their assets and the potential for how they could use housing equity.
Ryan McGrath, director of second charge mortgages at Pepper Money, said: “The data offers a clear view of homeowners who are thinking about big-ticket spending, both now and in the future. While credit cards and savings are still the most commonly used options, there’s a noticeable shift happening. The fact that 63% have used a credit card for a major purchase, but only 36% say they’d do so again, suggests people are starting to rethink the cost and consequences of short-term, unsecured borrowing.
“At the same time, we’re seeing a steady rise in longer-term forms of credit such as personal loans, mortgages and secured loans. These options, as well as the ability to access them quickly, offer a more predictable and efficient way to borrow.”
He added: “Secured loans, in particular, often get overlooked, but they can play a valuable role for those with equity built up in their home and who need access to larger sums to fund home improvements or to consolidate debt under a single regular payment. While not right for every homeowner, all options should be considered with a broker to ensure that consumers understand all of their options and can choose the ones that best fit their long-term financial needs.”
