Annual equity release lending hit a record high of £1.61bn in 2015, up 16 per cent from £1.38bn in 2014, according to new figures by the Equity Release Council.
The council says that lending via drawdown products was £271m between October and December 2015, the highest since these mortgages emerged in 2004.
Around 70 per cent of new plans agreed in Q4 2015 were drawdown, up from 63 per cent the period before.
The council says that drawdown lending for the whole of 2015 was also the highest on record, at £961m.
Annual equity release lending hit a post-recession low of £789m in 2011.
Over the whole of 2015, drawdown lifetime mortgages accounted for two in three (66 per cent) new plans agreed, while lump sum lifetime mortgages made up 34 per cent and home reversions less than 1 per cent.
ERC chairman Nigel Waterson says: “The rising popularity of drawdown has been one of the success stories of the last decade, and product features have since appeared allowing customers to protect a percentage of their equity as an inheritance, make part-repayments of capital or make interest repayments on their loan.
“Looking ahead, the challenge is to continue developing products which meet consumer needs while ensuring that innovation is combined with protection and long-term sustainability.”
Responsible Equity Release managing director Steve Wilkie says: “New pension freedoms have been the catalyst for this surge in interest in drawdown products.
“And we’re likely see drawdown continue to appeal to a retired population that now has more control over what they do with their pension income.”
Age Partnership equity release expert Simon Chalk says: “The growing popularity of the drawdown type of lifetime mortgage can be partly attributed to borrowers wanting to leave more of their housing wealth intact.
“Crucially, the market continues to strive to support best practice and transparency so older homeowners can feel confident to enjoy their retirement years with the comfort of a product they understand and which allows them to tap into their existing wealth.”