Increasing confidence in the use of property in financial planning has helped grow total housing wealth released to over £508 million in the first six months of the year, according to analysis from Key Retirement Solutions.
Customers taking out an equity release plan in the first half of 2013 released an average £55,272 – 12% up on 2012’s £49,305 – demonstrating confidence in the use of property wealth, the group’s Equity Release Market Monitor for the first half of 2013 shows.
Around 21% of customers used some or all of the cash to clear mortgage debts showing increasing awareness of equity release as a solution to the interest-only crisis.
Total funds released across the market climbed 12.2% to £508.413 million from £446.21 million and once untapped drawdown funds of more than £143 million – which have yet to be released – are added in the total released was nearer £652 million.
Plan sales climbed 2.7% during the six months to 9,540 from 9,288 with lump sum lifetime mortgages making up around 29% of all plans sold compared with 70% from drawdown.
Home and garden improvements remained the most popular use of funds – 57% of people used some or all of their cash for those purposes followed by 31% using money for holidays and 28% gifting the money to family and friends.
Dean Mirfin, Group Director at Key Retirement Solutions, said: “The sales trend is firmly up with plan sales continuing to expand. But the values released continue to grow faster than plan sales reflecting the increase in average amounts released.
“That highlights how customers are confident about making use of their property wealth as part of financial planning which is being driven by market innovation and the quality of advice.
“Equity release is playing a major role in helping retired homeowners maximise retirement income which is particularly needed when customers need to find the best solutions in the face of low interest rates and low annuity rates.”
Across the country all 12 regions saw increases in the value released with Scotland seeing a 36% rise followed by Wales on 27% and East Anglia on 25%. The smallest increase in value released was in London at 0.8% but it recorded a 7.4% rise in the number of plans sold.
However, five out of 12 regions saw a fall in the total number of plans sold with the South East recording the biggest drop of 12.6%. The region however saw a rise in value released of nearly 7%. Northern Ireland suffered a near 10% drop in plans sold while sales fell 4% in the North.