Data also reveals growing reliance on property wealth before pension age
More than a quarter of new lifetime mortgages arranged in the second quarter of 2025 were used to repay debt or existing mortgages, according to analysis by Pure Retirement.
The lender reported that 27% of its new business in Q2 was for this purpose, a figure unchanged from the previous quarter but higher than the 25% recorded in the same period last year.
Home improvements accounted for 23% of Pure Retirement’s new plans, up 2% from the previous quarter but down 2% year-on-year. Other leading reasons included holidays (9%), car purchases (8%), and gifting (8%), with these proportions remaining steady compared to both the previous quarter and the previous year.
Recent data from Legal & General indicates a shift in how homeowners are using equity release. The proportion of new applicants using equity release to pay off an existing mortgage fell from 31% in the first half of 2024 to 19% in the same period this year. Instead, more homeowners are opting to use equity release to support family members and for quality-of-life spending, such as using the funds for home improvements.
Lump sum products were the preferred option for new Pure Retirement customers, accounting for 56% of new business. This marks a shift from the even split between lump sum and drawdown plans seen in the first quarter, and is similar to the 55% preference for lump sums recorded a year ago.
Joint life applications comprised 58% of new plans in Q2, up from 53% in Q1 and close to the 59% seen in the same period last year. Among single applicants, 64% were women, a slight increase from the previous quarter but a decrease from last year, indicating a rise in the proportion of male applicants.
“The sustainable growth of the later life lending market is built on the foundation of consumer understanding, and we hope that these figures help those actively engaging in the market learn more the patterns being seen by a leading lifetime mortgage lender,” said Paul Carter (pictured left), chief executive of Pure Retirement. “It’s positive to see that, according to our figures at least, the lifetime mortgage landscape continues to cater to a wide variety of demographics, which offers hope of a positive year of market growth.”
Meanwhile, Key Later Life Finance highlighted the role of later life lending in supporting people over 50 who are unable to work but are not yet eligible for state pensions.
The employment rate for those aged 50 to 64 stands at 70.9%, still below the pre-pandemic high of 72.5%. The average age for leaving work is 65.7 for men and 64.5 for women, with regional variations such as a lower employment rate of 60.3% in Wales.
Analysis by Key Later Life Finance found that 23.2% of men and 31.3% of women in the 50 to 64 age group are economically inactive, with nearly half unable to work due to health issues. The company noted that property wealth is increasingly important for maintaining living standards and bridging income gaps before pension eligibility.
Recent figures from the Equity Release Council show that around 48% of later life lending borrowers are aged 55 to 60, and more than 73% are aged 55 to 65. Industry data indicates that people aged 50 to 64 collectively hold £2.183 trillion in housing equity, providing a financial buffer against unexpected events.
“Later life lending products are already playing a major role in helping with retirement planning by enabling fit and healthy over-50s to manage mortgage debt in a flexible and efficient way,” said Will Hale (pictured right), chief executive of Key Advice.
“The rising numbers of people who are unable to work through sickness, injury or disability in their 50s and early 60s need to look at a wide range of financial options, including housing equity, to bridge the gap until other sources of retirement income become available to them – for example the state pension.
“However, everyone’s circumstances are different and it is important that these products, which do have some downside risks, are accompanied by specialist advice.”
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