Key Retirement Solutions Equity Release Market Report for Q1 2010 shows up to £216.9m of housing wealth was released through equity release schemes compared with £183.1m in the same period of 2009 – a rise of 18.46%.
It found money is increasingly being used to help or treat family and friends – 35% of retired homeowners took cash to help family in the three months compared with just 19% in 2009.
Helping the family was the second most popular use of the cash released.
Home and garden improvements remain the most popular use of funds released through equity release schemes, with 58% choosing to release cash for those projects which require considerable capital outlay, for example a new kitchen, bathroom or conservatory and for many equity release provides the opportunity to make the garden more manageable.
Total sales of plans climbed 19% to 5,600 in the three months up from 4,703 in 2009 with drawdown plans – which enable customers to take cash when it is needed rather than all at once as a single lump sum – making up 68% of sales compared with 57% last year.
The average amount of cash released in the three months was £43,090 compared with £44,948 in 2009.
Dean Mirfin, business development director at Key Retirement Solutions, says: “The equity release market is healthier and delivering strong returns for retired homeowners as confidence increases which in part has been helped by the gradual property market recovery.
“Despite falls in property values over the past couple of years many find that they can comfortably raise the amounts they need from the current wealth tied up in their homes.
“It is striking that pensioners are more confident about using their wealth to benefit others rather than having to use the money for themselves. The over-65’s property wealth represents a massive investment success as many will have bought their homes more than 20 years ago.
“Helping family and friends was the second most popular use of equity release in the three months just ahead of holidays and behind home and garden improvements.”
The Market Report shows that equity release still plays an important part in repaying debt amongst pensioners with 23% of over-65s releasing equity during pay off non-mortgage debt while 17% used it to pay off an existing mortgage.
Lifetime mortgages made up 28.3% of sales in 2010 compared with 39.4% in 2009 while reversions remained basically unchanged at 3.7% of total sales.