More borrowers are taking out a lifetime mortgage to fund home improvements rather than repay mortgages so far this year, according to new research from Responsible Life.

The later life mortgage broker stated that this is the first time that repaying a mortgage is no longer the main reason people are releasing equity from their home.

In the year to the end of September, home renovation has been the main reason customers have unlocked housing wealth in five of the nine months, the broker revealed. 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.

Responsible Life records the primary reason each customer takes out a lifetime mortgage and according to the data, July 2019 was the last month when mortgage repayment fell from the top spot.

The firm suggested the change in trend is temporary, and being driven by the pandemic property boom which has unlocked greater options in retirement for those homeowners who are mortgage-free. According to Land Registry data, the average UK property price has risen 15.5% in the year to July 2022, and the average home has risen in value by £60,178 since the start of 2020.

Executive chairman of Responsible Life, Steve Wilkie, commented: “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.”

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