Equity release lending rose 28 per cent in the first half of the year, the highest growth in ten years, according to new figures from the Equity Release Council.
The ERC says lending hit £908m in the first half, up from £710m in the same period last year.
The number of equity release products on the market in 2016 so far is 34 per cent more than the same section of 2015, according to Moneyfacts.
Drawdown lifetime mortgages were the most popular product choice in H1 2016, with 67 per cent of new plans falling into this category.
A total of 7,917 drawdown plans were agreed in H1 2016.
The average age of equity release customers in H1 2016 was 69.9, with the age bracket of 65-74 remaining the most common for taking out a new plan.
However, year-on-year the percentage of new equity release customers aged 55-64 has increased from 17.5 per cent to 21.2 per cent.
The ERC says this may be a sign that people are starting to look at housing wealth as a potential asset earlier in the retirement planning process.
Equity Release Council chairman Nigel Waterson says: “Growth is being driven by a combination of rising consumer demand and continuing signs of innovation and change in the market.
“In terms of demand, savings shortfalls and other financial challenges leave many over-55s looking for an extra source of income in later life, while housing wealth also offers a vehicle for intergenerational transfer of wealth and inheritance planning.
“The industry response so far this year has already seen new providers, partnerships and new potential emerge, with closer relationships being built with related areas of financial services including residential mortgages and later life financial planning.”
Key Retirement technical director Dean Mirfin says: “The 10-year high for equity release market growth highlights how the combination of record low rates for plans and house price growth is making the case for how property wealth is increasingly supporting retirement planning.
“Retired homeowners have more than £1tn property wealth owned outright with the over-65s seeing strong growth from their investment in their house so it makes perfect sense to capitalise on those tax-free to enhance their retirement standard of living.
“The cuts in equity release rates in the past year alone mean homeowners releasing the average £76,300 now compared to a year ago would save around £30,000 in interest over 15 years rising to nearly £50,000 over 20 years.”
Bower Retirement chief corporate officer Andrea Rozario says: “Increased competition and innovation in the equity release market is helping drive growth to a 10-year high and the responsibility now is for the industry to ensure more customers become aware of the option of using property wealth to support retirement planning.
“It is striking that around half of new plans being sold enable customers to make voluntary repayments highlighting how the market is shifting to more retirement lending.”