The number of retirement interest-only mortgage borrowers spending their loans on giving family financial gifts has halved over the first half of the year, data from Hodge shows.  

The bank says its own completion data for the six months to July reveals that the number of retirement interest-only customers using funds raised to support family members has fallen to 7% from 14% a year ago.  

At the same time, the lender reports that customers using the mortgage for debt consolidation have lifted by 4% over the same period, compared to the prior 12 months.  

It says the move reflects cost-of-living concerns faced by households, caused by high inflation and rising interest rates.  

The Bank of England lifted the base rate by 25bps to 5.25% earlier this month, its 14th consecutive rise taking it to the highest level for 15 years as it battles inflation, currently at 6.8%.    

Hodge business development director for mortgages Emma Graham says: “It’s really important for us to understand what matters to our customers so we can continue to develop our propositions to support them in the moments that matter.  

“These latest figures show a change in customer behaviour, impacted by current socio-economic pressures.”  

The bank says since it introduced its retirement interest-only offer five years ago, it has trebled its maximum loan size from £500,000 to £1.5m, increased its maximum LTV from 60% to 75%, and lowered the age at application from 55 down to age 50 “to meet the needs of a larger audience”.  

Graham adds: “There is certainly no ‘one size fits all’ when it comes to a later life customer, with some using the product to plan for their retirement, and others looking to re-finance an existing interest-only mortgage or to plan for inheritance purposes.  

“Retirement interest-only loans may be niche, but they remain pivotal in providing a solution for a growing number of your more mature borrowers in today’s market.”