Almost one in three equity release plans are being used to pay off short-term loans including credit card debts, new figures from Key Retirement have revealed.
The figures showed that non-mortgage loans, including credit card loans, were the second most popular use of equity release capital, with 31 per cent using part of the capital for this purpose.
At 63 per cent, the most popular use was spending on home and garden improvements.
The Key Retirement Equity Release Market Monitor, published yesterday (11 January), found that just 22 per cent of plans were used to pay off mortgages.
A quarter were used to "treat or help" family and friends, 29 per cent to go on holiday, and 13 per cent to pay bills.
The total value of property wealth accessed through equity release rose by 26 per cent in 2016, hitting a record high of £2.1bn,
The number of individual plans, meanwhile, increased by 17 per cent, rising from 23,747 in 2015 to 27,666 in 2016.
The report found that the most common age for an individual or couple to access equity release was between 70 and 74.
The vast majority - 65 per cent - of those using equity release were couples. Single women were twice as likely (24 per cent) as single men (11 per cent) to access equity release.
Dean Mirfin, head technical director at Key Retirement, said the surge in popularity of equity release had seen the amount released had doubled in the last five years.
"The average amount being released by retired homeowners, at nearly £78,000, underlines that property wealth can help with a number of issues for customers, ranging from improving their homes and going on holiday to helping family clearing debt," he said.
"With more than one in five releasing equity from their homes to repay mortgages, and with with 2017 being the start of the first major wave of interest only mortgage maturities, we expect demand from those with a shortfall to repay the capital, or no means at all, to turn to equity release as a solution which will further drive demand."
james.fernyhough@ft.com
