According to new statistics from later life mortgage broker Responsible Life, home improvements were the main driver for people taking out a lifetime mortgage in 2022.
Three out of ten (29.7%) borrowers who released equity from their homes last year did so to renovate their properties.
Paying off a mortgage (27.3%) and early inheritance (8.9%) were the next most popular reasons for unlocking house wealth, with supplementing income and contributing to house deposits also favoured.
In nine of the 12 months in 2022, home renovation was the primary motivation for customers to take out a lifetime mortgage, the broker revealed.
This was a dramatic shift from previous years. Throughout 2020 and 2021, there wasn’t a single month when home improvement topped the list as the main reason customers were accessing equity release loans.
Responsible Life believes the change in trend was a temporary one driven by the pandemic property boom, which has unlocked greater options in retirement for mortgage-free homeowners.
And there were signs this trend may have run its course, with November and December seeing more people releasing equity to repay their mortgages than paying for home improvements – the first time since February 2022.
Until last year, repayment of existing mortgages has nearly always been the biggest reason, month to month with few exceptions, to take out equity release.
In fact, according to Responsible Life data, you’d have to go back to July 2019 to find a month when mortgage repayment fell out of the top spot.
Steve Wilkie, executive chairman of later life mortgage broker Responsible Life, said: “The post-pandemic property boom saw more homeowners using the wealth locked up in their homes to improve their properties.
“With house prices ballooning, people took the opportunity to take this boost in wealth to give their homes an update. This desire to upgrade could also have been a symptom of lockdown. Millions of us spent prolonged periods stuck at home. It made us see our properties in a different light – as not just a roof over our heads but also a sanctuary.
“Life has returned to normal, and November and December were the first signs that the home improvement trend has been taken over by more prudent financial planning in light of higher living costs.
“For the first time in eight months, paying off the mortgage once again became the main reason for people unlocking wealth in their homes.”
