The amount released through equity release is growing in comparison to the value taken in flexible pension payments, latest data has revealed.
Figures from the Equity Release Council (ERC) showed that there was 56p of equity released from homes for every pound of savings withdrawn flexibly from pensions in the fourth quarter of 2017, compared with just 29p in the second quarter.
According to the Equity Release Council, lifetime mortgage activity is the fastest-growing part of the overall mortgage market, with a 34 per cent increase in customers outpacing growth in first-time buyer, remortgage and homemover activity.
This is the second year that this has been the case, according to the trade body.
David Burrowes, chairman of the Equity Release Council, said: "With record levels of market growth and more flexible product options than ever before, using housing wealth to boost retirement income is becoming firmly established as a viable and compelling solution to consumer funding needs.
"Looking forward, we expect the need for new sources of income in retirement will continue to grow as many people will be unable to rely on pressured pension pots.
"It is vital more people understand its possibilities not only to provide income in later life or pay off debts, but also to provide a 'living inheritance' for family members and help fund care needs.
"Helping young people get on the housing ladder and paying for social care are at the top of the political agenda, and we look forward to strongly advocating for the role equity release can play in helping to meet these policy challenges."
The range of equity release products has also grown.
The number of equity release options available to consumers, which grew from 69 in January 2017 to 86 in January 2018.
Mr Burrowes said these new products contained flexible features and 70 per cent of product options now offer consumers the choice to make ad-hoc, penalty-free voluntary or partial repayments of their loan, to minimise the build-up of interest and even reduce the loan over time.
He added that rates on lifetime mortgages had also fallen..
Despite the Bank of England base rate rising from 0.25 per cent to 0.5 per cent in November 2017 average product rates fell by 0.23 per cent over the 12 months from January 2017 to 5.14 per cent in January 2018, at a time when many other personal borrowing products increased in price.
Tracey Lucas, equity release specialist from The Mortgage Centres in Ipswich and Suffolk, said the reason equity release was outstripping pensions was that not many people have large pension pots to draw on.
She said: "If people haven't got a pension pot this in an aid for retirement planning. It is an easy way to access money. And it is their money. It is just locked away otherwise."
She said although some clients use equity release for tax planning reasons, the clients she deals with are usually not making their decision based on tax driven thinking.
Ms Lucas said: "They want to pay off debt, or they need a new car or they want a holiday."
