Equity release adviser Key Retirement Solutions revealed that the total number of new plans rose for the first time since 2007 to 22,020 compared with 21,305 in 2009.
The 2010 Market Monitor showed that lifetime mortgages made up 23% of sales in 2010 compared with 33% in 2009, while reversions remained steady at 3% of total sales. Drawdown accounted for 74% compared with 64% in 2009.
However, the group said that the rise in popularity of drawdown plans meant that the amount of housing wealth released by homeowners fell 11% to £910.6m, down from £1,023.3m in 2009.
Dean Mirfin, group director at Key Retirement Solutions, said that customers benefitted from the flexibility and favorable terms offered by drawdown.
He said: “The true barometer for the industry clearly rests with the number of plans sold rather than the total amount released.
“The products available to consumers naturally make equity release a more attractive option through the overall flexibility, availability and greater control over the cost of borrowing.”
The research revealed that 7 out of 12 regions across the country saw growth in the total number of plans sold, with Scotland recording the highest increase with a rise of 27%, closely followed by the North with an increase of 23%.
Wales suffered a 23% drop in the number of sales, falling from 1,205 in 2009 to 920 last year.
In London, the number of plans taken out last year rose by 6.1% to 1,820 with £69,000 being the average value released from a property.
Despite drawdown being the popular option for retired homeowners last year, the group said that the plan had reached its plateau.
Mirfin said: “Around 15-20% of people need a one-off lump sum payment, which makes drawdown unsuitable for almost a quarter of the market.”
The group has predicted a growth in the number of plans this year, on top of the increase seen already.
“We’ve noticed that consumer confidence is higher than previous years with consumers having more knowledge about equity release, especially the drawdown option,” explained Mirfin.
“More and more consumers are also releasing equity to improve their homes and gardens or to go on holiday. They were the two most popular uses for cash last year.”
Repaying debt and helping the family with their finances also ranked highly as popular reasons for releasing equity.
The firm said that it expected to see new funders entering the market through tie-ups keem to fund equity release plans through the.
