Equity release up 22%, says Key Retirement Solutions

Funds released from pensioners’ homes soared by more than a fifth during the first half of the year. According to Key Retirement Solutions, retired homeowners took out equity release schemes worth £455 million during the first six months of the year, up 22% compared with the same period in 2009. The number of schemes taken out during the same period rose 5% to 10,318.

The equity release group attributed the steep rise in the amount of money released to renewed confidence in the housing market following price rises during the second quarter of 2009. Pensioners may also have been responding to low interest rates and rising inflation.

Drawdown plans, which enable people to unlock money in stages, continued to be the most popular type of equity release scheme during the first half of the year, accounting for 72% of all sales. The average age for unlocking equity was 69, compared with 67 in 2009 and customers unlocked an average of £42,555 each.

The main reasons retirees gave for unlocking funds were: funding home improvements (60%), holidays (36%) and repaying debt (33%). Others used the money to help family or friends, repay their mortgages and paying bills.

Dean Mirfin, group director at Key Retirement Solutions, said: “Housing wealth is an important source of income for pensioners and certain to become even more important as pension income continues to be squeezed. New business growth rates of 22% on 2009 demonstrate that customers are recognising that their housing wealth can be put to good use.”