While inflation has shown signs of slowing of late, the year so far has continued to provide a challenging backdrop for those wanting to make major financial decisions or plan for the future. This has certainly been true of Q3, as evidenced by our figures and the picture they present of very mixed usage patterns between aspirational uses for released equity, and those more rooted in necessity.

Let’s look at our analysis and see what new customers have been releasing funds for in Q3, and how it compares to this time last year, and Q2 of this year.

Among new customers, the most popular uses of lifetime mortgages remain a balance between the aspirational and the necessary. Both general (i.e. non-structural) home improvements and the repaying of debts and mortgages accounted for around 22% apiece of reasons for borrowing during Q3 – this represents no change in position among the top five most popular reasons for either, with home improvements just edging the top spot. Percentages as a proportion of loan applications have also largely remained stable both year-on-year and quarter-on-quarter, though home improvements saw a 2% drop compared to Q2.

Gifting has grown in popularity, having risen to the third most popular loan usage reason among applicants, compared to being fourth during Q3 2022 and Q2 2023. That said, as a percentage it’s remained remarkably stable, gaining 1% year-on-year to sit at 9% of new business volume, and remaining unchanged from Q2. While mortgage rates in the residential market have started to drop, they continue to remain relatively high, and as such will likely have contributed heavily to the continued popularity of gifting among families, especially among those who are seeking to help children or grandchildren enter the property market.

Additional aspirational reasons bring up the lower end of the top five most popular reasons for initial advances, with cars and holidays steadfastly remaining a constant despite the more changeable wider landscape. While holidays have dropped to fourth (from the third place it held in Q3 2022 and Q2 of this year), its percentage has continued to hold steady at 9% throughout the past twelve months. The 8% of people using new initial advances during Q3 for car purchases, meanwhile, represent a 1% increase year-on-year but a 1% reduction from the 9% seen in Q2 of this year.

The diverse range of needs and priorities among customers highlights the need for continued product innovation, and the need for those in the later life lending space to fully understand their customers and their circumstances. From updating their homes, repaying debts and helping family members, through to buying cars or arranging holidays, lifetime mortgages undoubtedly remain an adaptable product well-suited to various needs. With an appetite remaining present among consumers even amid an uncertain year for many, it points to a resilient financial services sector ready to support customers when they decide to explore later life lending.

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