The firm’s monitor showed the total value of property wealth released rose by 24 per cent from £1.38bn in 2014 to a new record £1.71bn for 2015.
Sales of equity release plans climbed to 23,747 last year, 11 per cent more than the previous year, as the pension freedoms underlined growth in retirement income choices.
Increasing house prices helped drive confidence in using property wealth to increase retirement income, with the average property value of homeowners using equity release plans rising around 6 per cent to £274,770 from £259,882 the year before.
However the average amount released increased by 11 per cent, from £64,750 in 2014 to around £72,000 last year.
In London on average customers released £128,000 and in the south east they benefited by releasing more than £84,000 of property wealth.
The majority of the money helped to improve retirement lifestyles, with 61 per cent using some or all of the cash to fund home and garden improvements, while 30 per cent used some of the cash for holidays.
But credit card and loan debts as well as outstanding mortgages remain a major issue, as 31 per cent of customers used cash to get out of the red, while 24 per cent paid off mortgages, according to Key’s figures.
Mortgage repayment has consistently increased over the last five years, as the number of interest-only mortgage maturities increases.
This trend is expected to continue as the first larger wave of maturities begins.
Dean Mirfin, technical director at Key Retirement, said debt in retirement remains a major issue, with large numbers of customers using money to clear mortgages, as well as credit card debt and loans.
He said: “That highlights a real need for lenders - including equity release providers - to develop solutions to help.
“The interest-only mortgage problem steps up a considerable gear in 2016 and the market needs further innovation to meet this increased demand from those who urgently need solutions to enable them to remain in their homes.”
Alice Watson, product and communications manager at Retirement Advantage Equity Release, said as increasing numbers of people use equity release, it is critical the industry works to ensure the market can develop to its full potential.
She said: “More comprehensive access to advice on equity release for financial advisers is perhaps the most important aim for 2016. At the same time, let us build on the good work done thus far and further foster an environment that encourages innovation among providers.”
Andrea Rozario, chief corporate officer at Bower Retirement Services, said it is no surprise the equity release market is growing as clearly more people are understanding the way releasing equity without having to move home can help.
She said: “Equity release can be a lifeline for those facing the end of an interest-only mortgage with limited options and its essential people are aware of how equity release works and how it can help.”
peter.walker@ft.com
