In 2013 the equity release market passed the £1bn threshold after a third successive year of growth, analysis by Key Retirement Solutions has revealed.
The rising use of equity release is indicative of increasing confidence in the utilisation of property wealth for retirement planning, likely caused by a combination of low annuity rates and a booming housing market.
Last year the average equity release was £56,045, up 7% from 2012’s £52,268 (itself a rise of 7% year-on-year).
Total equity released rose from £961m in 2012 to £1.06bn in 2013, returning the market to the level it was at prior to the financial crisis.
Improvements to the garden or home were the most common use of funds (58%), but the proportion using the money to clear mortgages rose from 18% in 2012 to 21% in 2013.
Dean Mirfin, Group Director at Key Retirement Solutions, described the rise in the use of equity release as substantial, and attributed the rise largely to the development of products specifically designed to address the needs of retired homeowners.
Last year, research from retirement specialist LV= found that more than half (52%) of homeowners over 50 intended to use the equity in their home to fund their retirement.
This was a dramatic increase on 2012, when the figure was 28%, just over half that of 2013.
Vanessa Owen, LV=’s head of Annuities and Equities Release, said that the number of people over 50 who intend to use their properties as pension had risen steadily since LV=’s first report in 2010.
Owen advised those considering unlocking the wealth in their homes to seek professional advice, and explore all the options available to find the one that suited them best.