Statistics from the Equity release Council (ERC) showed lenders, helped by newly launched insurance giant Legal and General last year, lent £393.9m in the first three months of the year.
Last month in its annual results, Legal and General predicted lifetime mortgage sales would hit £2.3bn by 2019.
Following the insurer’s acquisition of Newlife Home Finance in 2015, which became L&G Home Finance, the firm has reported lifetime mortgage sales of £201m, with £99m in Q4.
However, in total in Q1, borrowers took out 5,175 new equity release plans, a rise of 6% from 4,880 in Q1 2015, the first time plans have topped 5,000 in a quarter.
The take up of drawdown lifetime mortgage products increased slightly to 60% of all loans, with the volume of loans up 67% valued at £234.5m, an increase of 22% on the same period.
The value of lump sum mortgages accounted for 40% of total lending at £158.8m, up 19% from Q1 2015. The value of home reversion plans sold remains less than 1% of the market.
Nigel Waterson, chairman of the Equity Release Council, (pictured) said: “These latest figures represent a strong start to the year for the equity release market, and place housing wealth centre stage in financial planning for later-life.”
He added that the regulator’s decision to reduce affordability assessments for lifetime mortgages is a positive development for a generation that is often asset rich – cash poor.
He said: “As we look forward to the next 25 years, it is important now to maintain expert adviser support for customers as the sector grows, as well as continuing to innovate to satisfy customer demand, all the while preserving standards and consumer protections.”
Earlier this month, OneFamily, the mutual created by the merger of Family Investments and Engage Mutual, announced its is preparing to launch a range of intermediary-only lifetime mortgage products.
In an industry often criticised for lack of innovation, the product range will allow customers and their families to pay some or all of the interest each month, cutting the total borrowing cost and impact of rolled-up interest.