Equity release lending has risen 22 per cent as pensioner incomes have been squeezed.
According to the latest Equity Release Market Monitor from Key Retirement Solutions, there was an increase of £454.99million of value unlocked from pensioners' homes using equity release during the first six months of 2010, compared to £372.394 in the same period last year.
Pensioner incomes have been hit by low interest rates which have impacted on the returns from savings and investments, which many retired people rely on to boost their retirement income.
Rising house prices have also played a part in the significant increase in equity release lending, says Key Retirement Solutions, serving to boost confidence in the sector.
This is having a knock-on effect on the equity release market, it believes, as growing confidence and increased sales are encouraging more lenders into the equity release market.
The housing crisis saw several lenders drop out of the equity release market, but they are now showing signs of returning, offering retired homeowners more choice and competition when it comes to releasing cash from their homes.
KRS also believes that the increasing average age of equity release customers – up from 67 to 69 – demonstrates a need for alternative retirement income as retired homeowners struggle to maintain their standard of living on existing pensions.
In terms of sales, KRS reported a five per cent increase to an estimated 10,318 during the six month period, up from 9,852 during the same period in 2009.
Drawdown equity release, the most popular type, accounted for 72 per cent of sales, compared to 61 per cent last year, with the average amount of value released remaining largely the same, falling marginally from £42,586 to £42,555.
Commenting, Dean Mirfin, group director at Key Retirement Solutions, said that the figures "demonstrate that customers are recognising that their housing wealth can be put to good use."
"Housing wealth is an important source of income for pensioners and certain to become even more important as pension income continues to be squeezed," he said.
"The strong sales performance is underlined by the fact that the number of firms competing in the market looks to be turning the corner in a positive direction after recent withdrawals and that new plans offering improved terms to people with medical conditions are demonstrating that there is good space in the sector for further innovation."
© Fair Investment Company Ltd
Click here to get equity release quotes and advice to see if it's suitable for your circumstances »