Key’s Equity Release Market Monitor showed that 11,772 plans worth £886.59m were taken out in Q3 2019, with an additional £368.58m reserved for future use.
The volume of plans taken out was up eight per cent quarter-on-quarter at 10,936. However, year-on-year this was down to 11,722 – a three per cent drop.
Drawdown products now account for 75 per cent of all equity release plans sold, up from 63 per cent in Q3 2018. There was a decrease in the average initial amount released from £60,922 recorded in Q3 2018 to £58,729 this year.
Furthermore, the overall average amount released fell from £76,967 to £75,300 compared to the same period a year before on an average loan to the value of 24 per cent.
Lump sum lifetime mortgages made up 25 per cent of sales, including nine per cent of enhanced plans.
Increased interest in remortgaging
The number of people choosing to remortgage their equity release plan increased five per cent during the quarter, up from three per cent in the same quarter last year.
Equity release uses vary
While up to half of people use equity release to shore up their finances, Key found that 19 per cent used it to clear mortgages and 29 per cent repaid unsecured debt with the funds.
Some 67 per cent used equity release for home improvement, 34 per cent paid for holidays and 27 per cent used it to help family.
Appeal of low rates
Will Hale (pictured), CEO at Key, said: “Historically low rates and the wide range of products with innovative features mean that those who do want to help themselves or their families by accessing the value tied up in their home have a range of options.
“However, it also means that specialist later life advice is vital as making the wrong choice around whether to borrow, how much to borrow and how to borrow can have long term consequences.”