A third (33%) have previously used their mortgage to fund major spending, but only 18% plan to do so in future, Pepper Money reveals.
The research shows the continued popularity of credit cards amongst homeowners, seen as the most convenient and accessible form of short-term, unsecured, borrowing despite the higher interest rates.
It also found that 14% have turned to secured loans, when seeking to borrow larger amounts to fund life events such as home renovations or to consolidate debt that had previously been unsecured and spread across multiple accounts.
Nearly two thirds (63%) of homeowners have used a credit card to make a significant purchase. However, when asked about future intentions, only 36% of credit card holders said they would use their card again for a significant purchase.
Looking at how people will fund significant purchases in the future, a quarter (25%) of homeowners said they would consider a personal loan, 18% would use a mortgage and 17% would opt for a secured loan to fund a major purchase.
Pepper Money says this shift towards more long-term, secured borrowing suggests that in a more unpredictable economic environment, homeowners are looking to minimise their outgoings while gaining certainty and predictability from their monthly repayments.
Pepper Money director of second charge mortgages Ryan McGrath says: “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.”
“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 regularly payment.”
In October Pepper Money research found that it is taking more than 11 years across the UK for first-time buyers (FTBs) to save for a 15% deposit.
