Statistics from the Equity Release Council (ERC) have revealed that unsecured debt among homeowners aged 65 and over has increased by 16% per person from £1,336 in December 2013 to £1,546 in December last year.

The average balance on credit cards has risen 29% from £498 to £594 while outstanding overdrafts are up 47% from £60 to £88. Personal loan commitments have risen the least, with a 2% increase from £609 to £622.

A lack of savings has driven many pensioners to turn to unsecured lending to pay their monthly bills. While 76% of pensioners said savings would be their first option when they needed extra money, 9% of those surveyed said they had no savings. Almost 17% said they had less than £5,000 and 22% had less than £10,000 put away.

Personal loans, credit cards and family support were listed as the most common sources of financial help. Of those surveyed, 6% said they would consider a payday or doorstep loan.

Older borrowers are turning to these options despite sitting on thousands of pounds of housing equity.

With an average house price of £249,568 and an average mortgage of £57,062 the typical homeowner aged 65 and over has £192,506 of equity in their property. Many will have more equity available than this as 79% are mortgage free.

Nigel Waterson, chairman of the Equity Release Council, said the arrival of the guidance guarantee, free pension advice available to everyone post April reaching retirement age, will see people consider housing wealth as a retirement option.

“These figures suggest that housing wealth will play a key role in people’s personal budget calculations,” said Waterson.

“Long-term house price growth has left many older homeowners sitting on a personal property fund that can transform their financial outlook in later life. Equity release should be considered across the board as one of a variety of options on the table, so people make the right decisions and use all their available assets to secure the most comfortable retirement possible.”