Customers taking out an equity release plan in the first six months of this year released an average £55,275, 12 per cent on 2012, with 21 per cent using the cash to clear mortgage debts, data from Key Retirement Solutions reveal.
The group’s Equity release market monitor shows that clearing mortgage debt is now a more popular use of equity release money rather than paying off credit card and loan debts.
Total funds released across the market climbed 12.2 per cent to £508.4m in the first half of 2013, from £446.2m in the same period in 2012. Once untapped drawdown funds of more than £143m – which have yet to be released – are added in, the total released was nearer £652m, KRS adds.
Plan sales climbed 2.7 per cent during the six months to 9,540 from 9,288, fuelled in part by increased sales of lump sum lifetime mortgages which are increasingly being used as a solution for interest-only customers facing looming capital repayments, according to the firm.
In the first half of 2012 lump sum lifetime mortgages made up 32 per cent of sales, compared with 37 per cent in the first half of 2013.
Dean Mirfin, group director at Key Retirement Solutions, said “The sales trend is firmly up with plan sales continuing to expand. But the values released continue to grow faster than plan sales reflecting the increase in average amounts released.
“That highlights how customers are confident about making use of their property wealth as part of financial planning which is being driven by market innovation and the quality of advice.”
“Equity release is playing a major role in helping retired homeowners maximise retirement income which is particularly needed when customers need to find the best solutions in the face of low interest rates and low annuity rates.”
