Customers could be using income from equity release plans to meet their debts in increasing numbers, new data from lenders suggest.
The Finance and Leasing Association (FLA) said that new credit card spending among members had dropped by eight per cent year-on-year during August 2009.
Other unsecured credit spending had also fallen, with store card purchases and secured loans registering annual declines of 12 per cent and 61 per cent respectively.
These findings testify to the changing financial attitudes that have resulted from the credit crunch and recession, with more consumers looking to reduce their card and loan debts than before.
The FLA’s findings are supported by third quarter results from Key Retirement Solutions, the UK’s independent equity release specialist.
According to the figures, 36 per cent of customers who took out an equity release plan during the three-month period will use the income to pay down debts.
The value of equity unlocked from homes over the third quarter also rose by 13 per cent to hit £213 million.
Posted by Richard Planner
