Key Retirement Solutions believes the increasing use of equity release for maintaining and improving the home reflects the fact that in retirement we spend more time in our homes and maintaining and improving the home remains a priority.
It may also be an indication that those unable or unwilling to move in the current climate are deciding to stay put instead and invest in their homes.
The latest report also shows an increase in the number releasing equity for leisure, especially holidays, showing that many
retirees want to get more from their retirement years.
The year-on-year analysis demonstrates continuing confidence in the market which has been boosted by the return of lenders such as More 2 Life which has launched innovative schemes for people with medical or lifestyle conditions.
Analysis shows 63% of customers opting for equity release in the three months to September 30 used some of the cash for home and garden improvements compared with 43% in the same period last year and 31% used some of the cash to fund holidays compared with just 19% in the third quarter of 2009.
Total sales of plans climbed 7.2% to 17,121 in the nine months from 15,969 in the same period of 2009 with drawdown plans – which enable customers to take cash when it is needed rather than as a single lump sum – making up 74.5% of sales compared with 63% last year.
The effect of the continued move towards drawdown can be seen in the average amount released which for the nine months was £39,953 compared with £41,728 in the same period of 2009.
Around 35% of customers used some of the money to pay off credit cards or loans in the three months to September 30 – virtually unchanged on 36% in 2009.
Dean Mirfin, Group Director at Key Retirement Solutions, said: "Total sales of plans and total amount of equity released are both demonstrating strong growth with customers increasingly using the money to improve their homes or gardens.
"It’s a measure of confidence that customers are using the money for leisure and lifestyle improvements although clearing debts remains a major part of the market.
"Innovation by providers involving the launch of products offering enhanced terms for customers with medical or lifestyle conditions plus increasing use of drawdown all adds to more competition among providers which points to further growth into 2011."
The Market Monitor shows the average loan-to-value of equity release plans fell to 21% from 22% reflecting the shift to increased use of drawdown plans.
Single advance lifetime mortgages made up 24% of sales in 2010 compared with 34% in 2009 while reversions slipped from 3% of total sales last year to 1.4% in the first nine months of 2010.
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