Nearly two out of three customers opting for equity release are using some of the cash for home and garden improvements, analysis from Key Retirement Solutions shows.
The group’s Equity Release Market Monitor for the first nine months of 2010 shows up to £613m of housing wealth was released compared with £587m in the same period of 2009 as the total sales of plans continued to rise.
Analysis shows 63% of customers opting for equity release in the three months to September 30 used some of the cash for home and garden improvements compared with 43% in the same period last year and 31% used some of the cash to fund holidays compared with just 19% in the third quarter of 2009.
Total sales of plans climbed 7.2% to 17,121 in the nine months from 15,969 in the same period of 2009 with drawdown plans – which enable customers to take cash when it is needed rather than as a single lump sum – making up 74.5% of sales compared with 63% last year.
The effect of the continued move towards drawdown can be seen in the average amount released which for the nine months was £39,953 compared with £41,728 in the same period of 2009.
Around 35% of customers used some of the money to pay off credit cards or loans in the three months to September 30th – virtually unchanged on 36% in 2009.
Dean Mirfin, group director at Key Retirement Solutions, says: “Total sales of plans and total amount of equity released are both demonstrating strong growth with customers increasingly using the money to improve their homes or gardens.
“It’s a measure of confidence that customers are using the money for leisure and lifestyle improvements although clearing debts remains a major part of the market.
“Innovation by providers involving the launch of products offering enhanced terms for customers with medical or lifestyle conditions plus increasing use of drawdown all adds to more competition among providers which points to further growth into 2011.”
Across the country eight out of 12 regions saw growth in the total amount of equity released.