Key Retirement Solutions Equity Release Market Monitor shows the total value of equity release rose from £216.9million in the first quarter of 2010 to £219.85million in the first three months of 2011.
The growing use of drawdown, which accounted for three-quarters of all sales, was the main driver in market recovery with a further boost from the use of enhanced equity release aimed at customers with medical or lifestyle issues.
The ongoing rise of drawdown is driving the revival – as demonstrated by the fall in the average amount released by customers to £37,089 in the first three months of 2011 compared with £43,090 in the same period of 2010.
Drawdown – which accounted for 75% of sales in the first quarter compared with 68% in 2010 – benefits customers who cut borrowing costs as they can draw funds when required rather than in one lump sum.
Dean Mirfin, Group Director at Key Retirement Solutions, said: "The market recovery is on course after three years of decline with enhanced equity release making an important contribution.
"That clearly demonstrates the need for innovation and flexibility and shows that customers are happy to buy when the industry responds with products that suit their needs.
"The signs are positive for 2011 with new lenders poised to enter the market pointing to more competition and further potential growth."
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