Equity release customers are increasingly using property wealth to manage debt – with 22% paying off mortgages and 30% repaying credit card or loan debt.

Key Retirement’s Market Monitor builds on the Equity Release Council’s figures which showed an all-time high of £1.38 billion property wealth was released in 2014 as record numbers of homeowners took out plans.

Additionally, 63% of customers – compared with 58% in 2013 – used some or all of the money they released to fund home and garden improvements underlining how property wealth is enhancing retirement lifestyles.

The average age of equity release customers rose to 71 in 2014, from 69 previously, with customers’ average property value increasing to nearly £260,000 from £238,000 previously. That helped drive a 15% rise in the average amount of property wealth released by UK equity release customers to nearly £64,800.

Across the country 11 out of 12 regions saw growth in the average amount of property wealth released with Londoners taking the most at £127,412 – around 19% higher than the average £107,224 released the previous year. Homeowners in Yorkshire & Humberside released the lowest amount on average at £44,647.

The number of plans sold rose in nine out of 12 regions with Northern Ireland recording a 70% increase and Yorkshire & Humberside recording a rise of 18%.

Around 66% of all sales were drawdown plans, including enhanced drawdown which offers better rates to people with health or lifestyle conditions, compared with 34% from lifetime mortgages including enhanced products. The market share of enhanced plans rose to 13% from 8% previously underlining the focus on innovation in the market.

Key’s analysis shows the average initial amount released on drawdown plans – which reduce interest costs for customers – fell in 2014 to £35,544 from just over £38,000 the previous year.

Dean Mirfin, group director at Key Retirement, said:
“Equity release makes a major contribution to retirement planning with average customers releasing nearly £65,000 of their property wealth.

“Attitudes are shifting as pensioners recognise their property investment, if used wisely, can change their lifestyle. The launch of pension flexibility will accelerate that process with all the evidence showing people are spending their money sensibly.

“Debt in retirement however is a major issue with large numbers of customers using money to clear mortgages as well as credit card debt and loans. That highlights a real need for lenders – including equity release providers – to develop solutions to help.”

Call us now on 01204 884545 for more information on Equity Release Plans

You can use our calculator to work out how much equity you can release here