Home renovation has been the main reason customers have unlocked housing wealth this year, said Responsible Life.

The broker revealed that, in 2022, more borrowers have taken out a lifetime mortgage to fund home improvements than to repay mortgages. The latter was previously the most popular reason for taking out an equity release product. This is the first time it’s been overtaken by ‘home renovation’ as a motivator.

The change is quite a dramatic one. Throughout 2020 and 2021, there wasn’t a single month when home improvement topped the list as the main reason customers were accessing the loans.

So, why the change?

Pandemic property boom

Responsible Life said that it believes the change in trend is a temporary one driven by the pandemic property boom, which ‘has unlocked greater options in retirement for those homeowners who are mortgage-free’.

The average UK property price has risen 15.5% in the year to July 2022 (Land Registry), and the average home has risen in value by £60,178 since the start of 2020.

Now more mortgage-free borrowers are realising the level of equity they have in their home, and the benefits of unlocking it.

The company said this indicates ‘how ready homeowners are to use equity release to make positive decisions about their lifestyle and quality of life in retirement’.

It added that supplementing income, early inheritance and house deposits remain other popular reasons why people take out equity release loans.

Steve Wilkie, executive chairman of Responsible Life, said: “This is the first time we’ve seen a change like this in the equity release market. You used to be able to guarantee that mortgage repayment would be the most popular reason customers would take out a lifetime mortgage mortgage.

“This year we’ve seen that assumption turned on its head and it’s likely to be a symptom of how, for homeowners, the proportion of their wealth tied up in their main home has ballooned over the past two years. We expect mortgage repayment to regain its crown in the medium term, but it’s significant that what was once considered a product of last resort is now clearly anything but.”