One in five lifetime mortgage customers releasing equity for aspirational means

20% of new equity release customers are now listing either holidays (11%) or cars (9%) as the primary reason for borrowing, according to Q1 data from Pure Retirement.

These levels are the highest the lender has seen on both a year-on-year and a quarterly basis, with holidays now the third most popular reason behind home improvements (25%) and paying off debts and mortgages (21% - the lowest it’s been on both a yearly and quarterly basis).

The lender’s analysis also points to stability, with the top five reasons remaining unchanged over the last twelve months, with gifting rounding out the most common reasons in fourth place.

Among lump sum applicants in isolation, paying off debts/mortgages has remained the most common reason, sitting at 26% (albeit the lowest it’s been on both a yearly and quarterly basis, peaking at 29% in Q4 2023). Home improvements remained the second most popular reason, gifting came third at 11%, and contingency fund fifth at 8%, pointing to more needs-based borrowing among this audience – either for themselves or to help out their family.

Drawdown customers, meanwhile, favour more aspirational and lifestyle-oriented uses, with only 16% of applicants primarily using released funds for repaying debts and mortgages – 10% less than lump sum customers and only marginally above the 14% taking out a lifetime mortgage primarily for holidays. In the same way that lump sum customers listed contingency funds as their fifth-most popular reason, among drawdown customers it’s lifestyle improvements, accounting for 8% of cases by volume.

Pure Retirement CEO, Paul Carter, said: “These latest figures highlight the way that lifetime mortgages continue to cater for a diverse range of needs and audiences, and also underlines the importance of offering both lump sum and drawdown options, given they’re effective solutions for people for very different reasons.

"We don’t underestimate the importance of monitoring and understanding key customer trends, and look forward to continuing to use these sorts of findings to shape our product offering going forward.”