The easing of COVID-19 pandemic restrictions has prompted a return to aspirational spending for lifetime mortgage customers as data analysis has shown an increase in lifestyle-focused spending.
According to internal data from Legal & General Home Finance (LGHF), more lifetime mortgage customers are using their property wealth to fund lifestyle expenses such as travel.
Combined statistics from January and February 2022 show that the proportion of customers seeking to use lifetime mortgages to fund holidays and travel has almost tripled in comparison to the same period in 2021 – 20% in 2022, versus 7% in 2021.
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The number of customers using a lifetime mortgage to purchase a car also increased by nearly two thirds (68%) in the first two months of 2022, compared to the same period in 2021, another indicator that customers are increasingly returning to aspirational spending.
The number of those using lifetime mortgage solutions for health and medical purposes almost doubled (92%) in the first two months of 2022, compared to January and February 2021. LGHF said that this is likely due to the increased emphasis on personal wellbeing and extended NHS wait times for certain procedures.
LGHF pointed out that all these figures indicate that consumer spending confidence is gradually returning in line with pandemic restrictions officially lifting.
However, LGHF said that spending habits may change again as a result of the rising cost-of-living.
A study by the Office for National Statistics, published in February 2022, revealed that 66% of adults surveyed saw their cost-of-living increase, including 87% seeing an increase in household food shop prices, and 79% experiencing rising energy bills.
“As pressures, such as the pandemic, may have affected finances, the home is a valuable asset which can play a key part in supporting retirement, whether that is aspirational spending or helping younger family members who may have faced financial difficulties,” Craig Brown, LGHF chief executive officer, said.
“The rest of 2022 is set to bring a new range of challenges, as cost-of-living concerns hit households across the country, and we anticipate that people might seek out lifetime mortgages for different reasons in light of such pressures, for example for gifting purposes or to boost their retirement income. The data shows that even as the cost-of-living crisis looms, customers have been using lifetime mortgages for aspirational spending. We emphasise the importance for people to look ahead and to plan and budget for their needs, goals, and later life priorities.”