When comparing year to date (YTD) data for 2021 and 2022 on the reasons Hodge customers take out a retirement interest-only mortgage, it has seen homeowners taking out the loans for home improvements fall from 27% in 2021 YTD, to 18% in 2022 YTD.
And when it comes to debt consolidation, 13% of Hodge RIO customers used the funds for this purpose in 2021 YTD, compared with just 7% YTD this year.
The data found that other reasons for taking out a RIO - such as purchasing another property (30%) or gifts to family members (12%) - remained consistent year on year.
Emma Graham, business development director at Hodge, said of the data:
“This is a big drop for debt consolidation in particular, especially given the cost of living crisis and inflation continuing to rise. You would have expected more people to be using products such as the RIO to make their debt more manageable and have it all in one place – but according to our data, it seems that the opposite is true.
“The fall in the use for home improvements is understandable though, as many homeowners are no doubt tightening their belts and leaving any DIY or house extensions for a few years until the cost of building materials and labour drops.
“But it is encouraging to see that the RIO product is still proving useful to so many people to fund other improvements in their lives, such as a new home or helping out loved ones, at this economically difficult time.”
