According to Equity Release Council (ERC) figures, 6,671 new plans were agreed in Q2.
On an annual basis, borrowers are agreeing equity release deals at the fastest rate ever, with the three busiest quarters for equity release lending, all in the last 12 months.
Homeowners over the age of 55 withdrew a record £8.2m of housing wealth every working day from April to June.
Equity release is commonly used to pay off debt, provide extra retirement income, fund home improvements or care related adaptations, paying for travel or other one-off expenses, including gifting money.
Both OneFamily and Legal & General launched into the equity release lending market last year and the regulator supported the market further in April by allowing optional interest repayments to be exempt from mortgage affordability rules.
Santander agrees later lending Legal and General tie up for interest-only clients
Earlier this month, Santander confirmed a five-year agreement with Legal and General Home Finance to offer lifetime mortgages to existing customers struggling to pay off their interest-only mortgages.
In March, the insurance giant predicted lifetime mortgage sales will hit £2.3bn by 2019.
Lump sum lifetime products saw the largest growth with a 37% jump in lending value to £209m in Q2 this year from £152m for the same period last year. However, draw down products, which allow customers to make multiple withdrawals, continue to be the most popular, accounting for £304m of lending in the second quarter.
The Q2 total suggests 67% opted for drawdown product where 33% chose a lump sum.
This annual growth rate was the highest seen in four years since Q2 2012, during the UK’s recovery from recession.
Home reversion plans also experienced a rise in Q2 with the total value of activity more than doubling year-on-year from £623,647 in Q2 2015 to £1.5m in Q2 2016.
Nigel Waterson (pictured), chairman of the ERC, said: “These figures are the latest sign that UK homeowners increasingly see housing wealth as a fundamental part of their retirement funding plans. The long term rise of house prices has allowed many older homeowners to build up considerable reserves of housing equity, which have the potential to solve many of the financial challenges facing the UK’s ageing population.”
Bernie Hickman, chief executive, Legal & General Home Finance, said: “While it is good to see another record quarter, there is plenty more to be done. The market could be significantly bigger considering how much housing equity is owned by those in retirement. Lifetime mortgages still make up a small part of the wider mortgage market, but with an ageing population there is a clear opportunity for releasing equity to become a mainstream retirement solution.”
Dean Mirfin, technical director, Key Retirement said: “We expect the growth trend to continue throughout 2016 and beyond as an increasing number of people recognise the important role property can, and does, play in meeting the challenges of financing their retirement.”
