Customers took out £1.049bn in property wealth in the three months to the end of September, data from equity release adviser Key has shown.
The total value of equity released rose by 18.8% from nearly £884m in the third quarter of 2020.
However the number of equity release plans taken out decreased by 3.2% year-on-year to 10,333 (10,671 – Q3 2020) remained below pre-pandemic levels (11,772 – Q3 2019).
Total equity released in the first nine months of 2021 at £2.989bn is just short of the £3.4bn released in both 2020 and 2019 putting the market on course for a record £4bn.
Around 75% of customers took out drawdown plans in the three months with the average initial advance standing at £57,183 with customers still having the ability to draw a further £301.5m.
The average customer is 70 years old which is an increase from 2020, with 49% of those who take out equity release being between the ages of 65 and 74 years old.
Customers on average released £101,593 in the three months, around 23% higher than the £82,827 in third quarter of 2020.
Nearly three quarters of the money released (73%) was used for debt management and to helping family and friends in the three months to end of September.
Around £588m of the money released in the quarter was used to clear debts while more than two-fifths (42%) of the cash given to family and friends was used for house deposits while 36% was given as an early inheritance.
Key estimates that by the end of September the market transacted 3,000 remortgage cases with customers on average moving borrowing of £134,597 from a rate of 5.1% to 3.6%.
Northern Ireland lead the way with the value of property wealth released more than trebling while Wales and East Anglia saw growth of 74.7% and 61.6% respectively while all other regions saw double figure rises.
Northern Ireland was also the strongest performer for plan sales which doubled compared with the third quarter of 2020 while Wales, Yorkshire & The Humber and East Anglia all recorded double figure increases. Sales however dropped in five regions with the North West recording the biggest fall.
Will Hale, chief executive at Key, said: “Against the backdrop of a pandemic, the equity release market is on track to break the £4 billion barrier and potentially even touch £4.5bn by the end of the year.
“This performance demonstrates how modern equity release products are now embedded within the mainstream financial services market, offering low rates and flexible features to address a wide range of different customer needs and wants
“This year we’ve seen increasing numbers of people using equity release to support families, manage their current borrowing and use the historically low rates to remortgage their existing equity release plans.
“Whilst many plans have been put on hold during the pandemic, we also expect to see the return of people looking to boost discretionary spending as they look again at how to fund their later life ambitions.
“Equity release and other later life lending products can offer a solution to many of the opportunities and challenges that people encounter as they approach and move through retirement.
“However, it is vital that people consider all their options and get specialist advice to ensure they are making smart sustainable choices.”