People released an average of almost £80,000 from their homes in July in another record month for the equity release sector.
The figure of £78,334 was up 10 per cent on the previous month and 158 per cent year-on-year, according to provider Responsible Equity Release (RER).
RER said people are drawing wealth from their properties to prop up savings accounts, pay off mortgages and cover pension deficits.
The North East was the hotspot, with three times as much equity (203 per cent) released in total by homeowners compared to June.
Individually, North East homeowners released more than a third (37 per cent) more equity in July compared to June - up from £24,173 to £33,112.
London saw a 17 per cent rise in the total amount of equity released by homeowners in July compared to June, but the average amount released fell from a peak of £208,500 in June to £175,744 last month.
Over the past three months, 41 per cent more UK homeowners released equity from their homes than the previous three months.
Equity release – accessing the wealth built up in a home while continuing to occupy it – is becoming increasingly popular as people look for extra sources of cash in later life.
Lifetime mortgages are the most common product type, enabling people to take out a loan secured against their property that is repaid, along with any interest, on their death.
The other form, home reversion, involves people selling part or all of their home to a home reversion provider in return for a lump sum or regular payments.
With high deposits often putting homes out of reach for first-time buyers, many are using equity release to help their children onto the property ladder.
Others are using it to pay off interest-only mortgages as their repayment deadline approaches, having failed to put into place an adequate repayment plan at an earlier date.
Longer life expectancies and a failure to make adequate pension provision mean people are also using their property wealth to supplement their retirement income.
The trend marks a shift away from traditional attitudes to wealth, when people sought to hand down their assets to the next generation at the end of their lives.
But equity release products do allow people to ring-fence a percentage of their properties for later use, such as providing an inheritance.
Dominic Basilea, director at St Albans-based Aqua Wealth Management, said many people were turning to equity release schemes due to a lack of savings.
“I can see that figure growing as life is more expensive and properties are good values, and people’s pensions are not sufficient,” he explained. “For what we have done, it is mainly pension top-ups or additional income.”
He added that another popular use for equity release among his clients was to fund home improvements.
simon.allin@ft.com
