Analysing its client base, Responsible Life found that 30 per cent of borrowers used equity release to renovate their homes compared to 27 per cent of those who paid off a mortgage with the money.
Some nine per cent of borrowers used the money to give an early inheritance, while supplementing income and contributing to house deposits were also popular uses of the product.
Across 2022, home renovation came out as the top reason for taking out equity for nine months of the year.
Responsible Life said this differed from the two previous years when there was not a single month that home renovations were the primary use of equity release.
The firm said the trend may be temporary and driven by the property boom seen over the pandemic which boosted the values of homes.
However, the trend seemed to die down in the last two months of the year, as the firm found that the main use shifted back to people using equity release to pay mortgages rather than home improvements.
November and December were the first months that the trend reversed since February 2022.
According to the firm’s data, the last month that paying off a mortgage was not the primary use of equity release was as far back as July 2019.
Home as a sanctuary, not an investment
Steve Wilkie, executive chairman of 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.”
