We recently analysed our Q3 loan usage data for initial advances, looking at the top five reasons or lifetime mortgage borrowing among our customers by application proportion. The results painted a mixed picture, with necessity-based reasoning such as debt repayment sitting alongside more aspirational reasons such as holiday and car purchases.

Having similarly looked at the reasons for cash release access and additional borrowing via further advances, a similar (and, if anything, heightened) picture emerges. Perhaps unsurprisingly given the current landscape, day-to-day living expenses, emergency funds and debt repayment are prevalent in these returning customer patterns, while those wants-based reasons remained strong among the top loan usage reasons.

Let’s look at our findings in more detail, and see what returning customers have been releasing funds for in Q3.

Cash Releases

As with all forms of borrowing – whether initial advances, cash releases, or further advances – home improvements account for the most popular reason for reducing funds. Among cash releases, they account for 40% of drawdown activity, representing a 1% drop from both Q3 last year and Q2 2023.

Holidays, meanwhile, have remained in the second spot but have seen a continued reduction in activity as a proportion of cases – the 13% seen this quarter is 3% down on last year, and 2% down from Q2 this year. Car purchases have maintained the 9% proportion seen in Q2 (down from 10% last year), but have actually risen by one position in terms of popularity from the fourth place seen in Q2.

Nearly one in ten people accessing drawdown facilities are doing so to pay for their day-to-day living expenses. This didn’t register in the top five at all this time last year, and having sat at 11% (and in third place by popularity) in Q2, it’s now dropped to fourth with a 9% share.

Gifting has remained stable as a lesser consideration among those who access drawdowns, sitting at 5th place and 6%, neither statistic representing any major change over the past twelve months.

Cash release loan use Q3 2023 Proportion Q3 2022 Proportion Q2 2023 Proportion
Home improvements 40% 41% (1) 41% (1)
Holiday 13% 16% (2) 15% (2)
Car 9% 10% (3) 9% (4)
Gifting 9% Structural Home Improvements – 5% 11% (3)
Living expenses 6% 6% (4) 5% (5)

Further advances

Home improvements’ 27% proportion of additional borrowing represents a 3% year-on-year drop, but a 1% increase from Q2. There’s been a 2% quarter-on-quarter rise in the proportion of people using additional equity to create an emergency fund, with the 13% seen in Q3 also a one-position rise to second place in popularity, suggesting an uptick in releasing additional funds out of necessity – however it should also be noted that this also represents a 2% reduction compared to last year.

Holidays have continued to sit mid-table (at around 12%) as a reason for additional borrowing, though it’s dropped a position from the second most popular usage it held in Q2. Gifting, meanwhile, has seen a 1% drop quarter-on-quarter and a 2% drop year-on-year, suggesting a prolonged period of it becoming less popular as a reason for further borrowing.

In Q3 last year debt repayment held the fifth place position by proportional popularity, but has since been overtaken by car purchases. Having emerged in Q2, it’s remained the 5th most popular reason in Q3, mainly holding stable with only a 1% reduction in that period.

Further advance loan use Q3 2023 Proportion Q3 2022 Proportion Q2 2023 Proportion
Home improvments 27% 30% (1) 26% (1)
Emergency fund 13% 15% (2) 11% (3)
Holiday 12% 11% (4) 12% (2)
Gifting 10% 12% (3) 11% (4)
Car 8% Debt Repayment – 10% 9%

The mixed picture being presented alongside more aspirational means points to the diverse customer profile that underlines the market’s development in recent years. It also points to the need for a holistic approach when it comes to product development to ensure lifetime mortgages continue to a potential retirement avenue for as many people as possible (even when it comes to returning customers, rather than solely new applicants), and we’re looking forward to continuing our own commitment to that into 2024 and beyond.

Find out more about Pure Retirement here