Key Retirement has reported that retired homeowners released over £3 billion of property wealth last year as the equity release market expanded at a record rate.
Homes paid out more than £8.2 million a day last year to pensioners with the average retired homeowner using £77,380 of property wealth to boost their standard of living.
The total value of property wealth released in 2017 grew 40% on the previous year to £3.014 billion – the fastest rate of growth on record and the sixth increase in a row taking it to more than double its size in 2014, Key’s 2017 Equity Release Market Monitor shows.
More than 100 retired homeowners tapped into their property wealth to enhance their retirement finances every day last year as plan sales increased by 41% to 38,955 from 27,666 in 2016.
Homeowners unlocked an average £77,380 tax-free each by using equity release highlighting the importance of property wealth in retirement planning.
The most popular use of the cash was to fund home and garden improvements with 64% re-investing some or all of their money in their houses. In addition to the high percentage taking care of their homes, 33% were taking more holidays while 24% helped family and friends.
However, many used the money to clear debts with 22% paying off existing mortgages including interest-only capital repayments and 31% clearing credit cards and loans.
Londoners cashed in the most taking an average £133,700 compared with nearly £49,000 in Scotland, Key’s Equity Release Market Monitor, which analyses data for Equity Release Council members and non-members shows. Around 27% of all plan sales were in the South East of England which accounted for nearly a third of the property wealth released during the year.
Dean Mirfin (pictured), chief product officer at Key Retirement, said: “Expansion in the market is being driven by customer demand as retired homeowners’ confidence in making full use of their property wealth continues to grow.
“2017 saw a series of records broken but perhaps most significant is the pace of expansion last year with around 40% growth in plan sales and the total value released at an all-time high.
“More lenders are launching in the market in response to demand and that in turn is increasing competition, driving down rates and bringing new innovative features to the market as expert advisers increasingly recognise how property wealth makes a major difference for retirement income.”