According to the Equity Release Council lending via equity release totalled £908m during the first half of 2016, an increase of £198m on the same six months the previous year.
The council has estimated that, by the end of 2016, equity release lending could top £2bn.
The rise has been fuelled by a rise in the number of providers and products that have appeared on the market.
But it is rising property prices, combined with low savings rates and the need to help cash-strapped younger relatives that has fuelled demand for equity release, according to Dean Mirfin, technical director at equity specialist adviser Key Retirement.com.
He says research has shown retired homeowners in the UK own property worth more than £1 trillion.
The Equity Release Council estimated that cuts in equity release rates in the past year alone meant homeowners releasing the average £76,300 from their property would have saved around £30,000 interest over 15 years, compared to a year ago.
In fact equity release rates are now nearer those offered on standard mortgages.
Nigel Waterson, chairman of The Equity Release Council, says: “The average lifetime mortgage rate fell 24 basis points.
That was than any other category of mortgage product during the first half of the year. In fact it reached 5.96 per cent in July and there are an increasing number of sub-5 per cent rates available.”
The range of products has increased as rates have reduced. The number of equity release products available according to Moneyfacts, as of the end of March this year, rose 34 per cent year-on-year and had more than doubled compared with three years ago.
The market for equity release has also been driven by the baby boomer generation - who have benefitted from rising house prices throughout most of their working lives.
The typical equity release borrower is aged between 65 and 74 years old, while the number of over-75s choosing an equity release product outnumbered those in the 55 to 64 year age bracket, according to The Equity Release Council.
This ‘cash rich’ demographic may also explain why the money released from property is largely going towards ‘luxury expenditure’.
Joanna Fowler, head of product at Saga Money believes one of the most common reasons for releasing equity is for home improvements.
She comments: “It is becoming more apparent that more customers are using equity release as a way of funding a comfortable lifestyle in retirement.
Ms Fowler says this behaviour is likely to change and the use of equity release as a debt management tool was likely to increase as the decline in final salary pensions started to impact the market.
She explains: “This will be amplified by shortfalls in retirement savings.”
“Interestingly, we see around one in five Saga customers releasing equity from their home to give gifts to family members.”