Rising house prices enabled older homeowners to release more than £1bn in property wealth in the first three months of the year, according to data collected by Key.
This equates to over £11.3m a day, with the average customer releasing receiving £103,710 – an 25% increase over the £83,242 released in the first quarter of 2020.
Key believes this highlights how over-55s are confidently using their housing equity to support family and ease the pressure on income by managing debt.
Total equity released in the three months to 31 March increased by 12.8% to £1.07bn from £950.59m in the same period last year, despite plan sales falling by 9.5% to 10,341 from 11,423.
The average price of a house used for equity release rose 12% to £366,660 from £326,486 last year and were substantially higher than the national average house price of £232,134 in March.
The amount of reserved drawdown and further advances taken dropped by 6% from £146.30m last year to £137.86m.
The biggest drop was in reserved drawdown which fell from £123.85m to £112.39m.
Around three-quarters of the money was spent on clearing mortgages (34%) and unsecured debts (26%) while continuing to help families with gifting (21%).
Fewer people managed mortgage (23%) or unsecured (25%) debt in Q1 2020 with the aid of equity release but even with the stamp duty bounce driving the market, we saw more gifting (29%) in the first quarter last year.
Unsurprisingly, the amount spent on holidays fell to just 1%, from 8% in Q1 2020, and we saw only 7% of the equity released used for home improvements, from 17% in Q1 2020, as over-55s focused on essential rather than aspirational spending.
Will Hale, chief executive at Key, said: “The strength of the property market driven by the extension of the stamp duty holiday and the launch of government guarantees for over 95% LTV mortgages is helping to increase the property wealth that over-55s can use for retirement planning.
“However, the equity release market is building its own momentum and demonstrating continued resilience as client look to it for support with debt management and gifting.
“The average amount released at more than £103,710 demonstrates how important property wealth is in meeting customers’ wants and needs while the rise in the average value of homes owned by customers’ shows how wealthier customers are looking to use their homes.
“Lower interest rates and greater flexibility driven by lenders focus on product development is adding to the momentum as the sector continues the journey to become a true later life lending market built on the foundations of specialist advice.”