Total lending rose to £256.6m in the three months to 30 September 2012 and would have reached £383m if untapped drawdown funds, which have yet to be released worth £126.5, were added in.
Plan sales rose 10% to 5,260 in the third quarter compared with 4,779 for the same period of 2011 while growth in total lending was up 11% from £230.8 million in the third quarter of 2011.
Around 19% of customers used some or all of the cash to pay off mortgages underlining how the interest-only mortgage issue and the ongoing endowment problem is influencing the decisions of equity release borrowers.
Total funds released for 2011 were £959.6 million according to the Key Retirement Solutions’ Market Monitor after the first year of growth since 2007. And this year is on track to beat that total.
Drawdown made up 70% of total sales in the third quarter compared with 29% for lifetime mortgages and just 1% for reversion plans.
Commenting, Dean Mirfin, group director at Key Retirement Solutions, said: “The ongoing squeeze on pensioner income and the ticking time bomb of interest-only mortgages are making the case for equity release.
“Continuing innovation in the market with the launch of plans designed to tackle interest-only issues as well as enhanced products for people with medical and lifestyle conditions underline how the market is expanding.”
Mirfin added: “The formation of the Equity Release Council is also helping drive expansion by ensuring all parties involved in the market work together.”
Home and garden improvements remained the most popular use of equity release cash with 53% of selecting that option while 18% used the money to clear debts and 29% put it towards a holiday.
And almost one in three used the funds to help out members of their family with their finances.
Across the country nine out of 12 regions saw growth in the total number of plans sold with Northern Ireland leading the way at 75% with the North and London both recording rises of 34% and 35% respectively. Yorkshire & Humberside saw a fall of 9%.
The biggest growth in total value released was in Northern Ireland where total value nearly trebled while Scotland saw totals climb by 65% and the North by 45%.