Retired homeowners released £3.6bn in new property wealth last year, with the equity release market doubling in size in just three years, according to new data from equity release adviser Key.

Furthermore, the equity release firm highlighted that, when further advances and additional drawdown are taken into account, the market is nearing £4bn.

Properties paid out almost £10m per day in 2018, with customers releasing an average of £76,500 to improve their standard of living in retirement, Key found. The volume of sales increased by a staggering 21 per cent over the year, rising to 47,081, while new lending grew by an astounding £586m, resulting in the total released in equity last year being more than double that of 2015’s £1.71bn.

The number of customers using money to help families increased slightly from 24 per cent to 27 per cent, which Key said highlights how property wealth is increasingly supporting a wider range of financial needs for those in retirement.

The firm revealed that money gifted to family and friends is typically being used to clear debts, cover the expenses of significant life events such as weddings or to fund house deposits. The research found that other common purposes include paying for large family holidays, funding university for relatives and purchasing new cars.

However, the most popular use of the money remained as funding home and garden improvements, with 64 per cent of borrowers re-investing some or all of the money in their properties, often to “age-proof” it.

Almost a third (31 per cent) used the money to clear credit card debts and other loans, while 22 per cent of customers paid off existing mortgages.

Commenting, Key CEO Will Hale said: “The equity release market recorded another strong year of growth in new lending taking it to £3.6 billion and has doubled in size in three years demonstrating how important it is to retirement planning. Once further advances and additional drawdown is included it is getting close to £4 billion.

“The growth in gifting highlights the intergenerational benefits of equity release for families with money being used to clear debts, fund university fees and pay for house deposits and weddings. Even the use of equity release to fund home and garden improvements has benefits for families as it helps people to ‘age-proof’ their home and preserve wealth for the family.”

Despite this, Hale acknowledged that debt remains a “major issue” for some retirees, with substantial numbers “relying” on equity release to clear credit cards and loans.

“Good specialist advice is key to ensuring that older homeowners receive the most benefit from their property wealth and use it in the most appropriate way for them and their families,” the Key CEO concluded.

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