Equity release has taken a "dramatic" turn as home improvements have been ranked as the most popular reason for taking out a lifetime mortgage this year.
In previous years, repaying a mortgage used to be the main driver of the product’s popularity, according to research from broker Responsible Life.
However, in five of the nine months to September, home renovations were the main reason borrowers used equity release.
This is a large contrast from 2020 and 2021 when home improvements were not listed as the main reason for equity release in any single month.
Responsible Life said this change in trend is a temporary one driven by the pandemic property boom, which it said has “unlocked greater options in retirement for those homeowners who are mortgage-free”.
The average UK property price has risen 15.5 per cent in value in the year to July 2022 according to the Land Registry, while the average home has risen in value by £60,178 since the start of 2020.
Responsible Life’s executive chairman Steve Wilkie said: “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.”
Wilkie said he expects to see mortgage repayment “regain its crown” in the medium term, but that it is significant that “what was once considered a product of last resort is now clearly anything but”.
Supplementing income, early inheritance and house deposits remained other popular reasons why people have taken out equity release loans, the broker revealed.