Home improvements and debt consolidation drop as the reasons for taking out a RIO mortgage in 2022

Over the past 12 months, the motivations our customers have for taking out a RIO mortgage have changed significantly according to recent in-house data.

When comparing year to date (YTD) data for 2021 and 2022, we found the number of homeowners taking out loans for home improvements fell almost 10% from 27% in 2021 to 18% in 2022.

When it comes to debt consolidation 13% of our RIO customers used the funds for this in 2021, compared with just 7% this year, a near 50% drop.

The data found that other reasons for taking out a RIO remained consistent year on year:

                                                          2021 YTD                      2022 YTD

• No money raised  (remortgage) - 30%                               27%
• Purchase another property -         27%                               30%
• Family gifting/gifting to others - 11%                               12%

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.”

Over the period of January to August 2022 we have also seen a 41% increase in in the value of our RIO mortgage book, compared with the same time frame in 2021. Four years after being one of the first lenders to launch a RIO mortgage product, it is positive to see a continued demand to support customers as their needs change. 

For more information about our RIO mortgages, click here.