The amount lent through equity release is set to hit an all time high of £2bn in 2016, according to the Equity Release Council.
For the first nine months of the year £1.48bn has been lent for all products, and if the figure of £2bn is broken this will represent a 26 per cent rise on 2015's total figure of £1.61bn.
The volume of new equity release plans grew by 23 per cent year on year, with the fastest growth coming from lump sum lifetime mortgages which grew 44 percent year-on-year, while drawdown lifetime mortgages saw a 21 percent rise since the end of October 2015.
Quarterly figures show lump sum lifetime mortgages increasing their market share from 33 percent of new plans in Q2 to 37 percent. Drawdown lifetime mortgages accounted for 62 percent of new plans in Q3 with 4,632 plans taken out.
Nigel Waterson, chairman of the Equity Release Council, saw the overall rise in lending has been helped by the falling costs of equity release which has been caused by increased competition and lower interest rates.
He cited product innovation as another driver of demand; individuals can now choose inheritance protection, downsizing protection, monthly interest repayments or voluntary capital repayments on a lifetime mortgage.
Stephen Lowe, group communications director at Just Retirement, saw a growing familiarity with equity release as another cause of its rising popularity.
“When we asked the over 45s about their knowledge and interest in using equity release to pay potential future long-term care costs, we found both awareness and the number interested in knowing more is continuing to rise."
Simon Chalk, equity release expert at Age Partnership, saw only continued growth for the market.
“Housing wealth continues to play a crucial role in retirement planning with trillions tied up in over-55s’ properties," he said. "This is set to carry on in an upwards trajectory in the coming years."