Later life mortgage broker Responsible Life has reported that the average property value of a lifetime mortgage customer has passed the half a million pound mark for the first time as the industry continues to make in-roads with financial advisers and wealthier customers.

The average home value for lifetime mortgage borrowers reached £539,844 in October, up £84,367 in 12 months, according to the broker’s analysis.

This represents an 18.5% increase on the £455,477 average value in October 2020 and a 31% rise on the £412,090 recorded in October 2019, before the pandemic struck.

The broker said the steep rise in property prices over the past year cannot entirely explain the change, which indicates that lifetime mortgage providers are attracting wealthier customers as part of what Responsible Life’s executive chairman, Steve Wilkie, has previously referred to as a “middle-class stampede” for equity release products.

Average UK property prices only gained 10.6% in the latest available year and 13.2% over the past two years, according to Land Registry.

Responsible Life said further evidence of the shift to an audience that transcends wealth status comes from an increase in the number of customer properties exceeding £750,000 in value. 15.8% of homes used to secure a lifetime mortgage are now worth more than three-quarters of a million pounds — up from 11.4% two years ago.

Meanwhile, the average amount released by lifetime mortgage customers has also been climbing sharply. Over the past 12 months the average release amount has risen 9.3% to £115,207 — and is now 42.96% above where it was at the same point pre-pandemic (October 20193).

The growing popularity of lifetime mortgages is being driven by historically low rates, rising property prices and the fact that they are increasingly being seen by homeowners and all-important financial advisers as a key plank of financial planning in retirement, Responsible Life said.

Rates on lifetime mortgages have more than halved in recent years to below 3% in many cases.

Wilkie said: “Lifetime mortgages are exploding in popularity but that doesn’t tell the whole story. This research underlines how they are also attracting an increasingly diverse and wealthy audience.

“The pension gap that separates what retirees need in retirement and what their savings will afford them is not just a problem for the least well off, and plenty of wealthier homeowners who want to stay in their own homes face this dilemma.

“Amid a worsening cost of living crisis, lifetime mortgages are finding a firm foothold with aspirational retirees, who are looking to find ways to close the affordability gap on the lifestyle they want to continue enjoying in later life.”