The appeal of using property wealth as an extra source of retirement income continues to grow, according to figures indicating record amounts of equity release lending.
Lending in the second quarter of 2015 – at £384.3m – was the largest of any quarter since 2002, the Equity Release Council (ERC) reported.
It said the period attracted more than 5,400 new equity release customers, up 11% from the previous quarter, adding its records show homeowners aged 55 and above are withdrawing more than £4m of housing wealth every day.
New plans taken out in the first half of this year topped £710m, the largest H1 on record, the ERC added.
Experts suggested a “perfect storm” of rising house prices, tougher borrowing conditions and a lack of pension provision had stimulated the growth.
Saga head of retirement Alex Edmans said: “The Mortgage Market Review has stopped many older people from accessing a traditional mortgage, this and the fact that many people are now coming to the end of their interest only mortgage term without a full repayment plan, has meant that more are turning to equity release as a viable solution to borrowing in retirement.
“Indeed, Saga has seen an increase in the use of equity release to clear a mortgage.
“Now is a good time to consider equity release, as interest rates are at their lowest ever levels, property prices are increasing and loan to values have recently increased, meaning people are able to access more of the wealth tied up in their property.”
Partnership head of implementation Helen Davies said the market was going from strength to strength.
She said: “Rising house prices combined with lack of pension provision and older consumers finding it increasingly tougher to borrow have created a perfect storm which is likely to continue to stimulate growth well into the future.
“While equity release should never replace adequate pension provision, considering how you can use your housing wealth in retirement should be part of people’s later life planning.
“Whether it is used to repay a mortgage, to fund care or simply improve someone’s standard of living, it can make a big difference to people’s quality of life.”
Retirement Advantage Equity Release product and communications manager Alice Watson said the a record-breaking year in 2014 has been followed by an even better first half of 2015.
She added: “It’s clear that equity release is becoming an increasingly popular option for over 55s.
“We’re seeing more and more people recognising the benefits that equity release can bring, including those who are being shut out by mainstream lenders.
“With that backdrop of increasing popularity, there’s no reason equity release can’t continue to grow and gain an even stronger foothold in the lending market.”