In Q1 2019, £839.6m worth of equity was released, with 35 per cent of retired homeowners using this new-found wealth to clear credit card debts, while 28 per cent cleared their mortgage, data from equity release adviser Key revealed.

Key’s Q1 2019 Equity Release Market Monitor highlighted that new lending in the period was up from £777m in Q1 2018, while the reported £340.4m in new potential drawdown facilities was up from £252.9m.

The data suggested that equity release is growing in popularity, with the number of those using property wealth to clear debts in the first three months of the year being the highest since the third quarter of 2016, and the third highest on record since Key started the market monitor in 2007.

Furthermore, planned sales increased 6.6 per cent year-on-year to 11,190, in the first quarter of 2019, compared with 10,495 in 2018. The monitor found that Northern Ireland, the West Midlands and Yorkshire and The Humber recorded the largest increases as growth spread across the UK.

According to the figures, customers released an average £75,032 during the three months and the most popular use of the money remained paying for home and garden improvements. Almost two thirds (60 per cent) of people used their equity release for this purpose, with many of these using some or all of the cash to future-proof their home for retirement. Around one in three (31 per cent) chose to pay for holidays while 30 per cent were able to use some or all of the cash to support their relatives.

Commenting on the figures, Key CEO Will Hale said: “Typically the equity release market has a quieter start to the year but the latest Q1 results suggest that we should see continued growth in 2019. The current challenging economic environment has seen a move away from holidays and home improvements to people tackling pressing immediate issues such as to pay off debt.

“Nearing or entering retirement with an income that might be exceeded or matched by debt repayments can be hugely stressful and may mean people need to make fundamental changes to their plans such as working longer.

“However, this will not solve everyone’s issues and is not even viable for some so looking into downsizing, equity release or other later life lending options might be the right answer. Not only will making sensible choices around property mean that people are less stressed, but it will help to set them up for a more comfortable retirement in the future.”

Key’s Market Monitor found the biggest increase in value release was in the West Midlands, where total values increased by 24 per cent, while the East Midlands and North East saw gains of 20 per cent.

However, London and East Anglia experienced falls in the amount released, at -£7.4m and -£225,000 respectively. According to the equity release adviser, this was due to property owners reacting to volatile house prices amid Brexit uncertainty, therefore releasing lower amounts of equity.

The biggest rise in plan sales was in Northern Ireland at 39 per cent with the West Midlands and Yorkshire and The Humber recording 26 per cent gains and the North East seeing a 19 per cent rise.

Drawdown plans remained the biggest sellers, accounting for more than two thirds (68 per cent) of all sales, with enhanced drawdown, which offers better terms for people with health or lifestyle conditions accounting for 21 per cent. Lump sum lifetime mortgages made up 32 per cent of sales, including 11 per cent of enhanced plans, the data from key found.

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