Customers taking out an equity release plan in the first quarter of 2013 released £56,710 on average compared to £44,519 in 2012 which KRS believes shows an increased confidence in the use of property wealth.
Dean Mirfin, group director at KRS, said: “The increased use of lump sum lifetime mortgages is significant as it shows the growing confidence in using property wealth and success for ongoing innovation, higher advances increasingly needed to help clear outstanding mortgages.
“That is reflected in the increase in the average amount being released in response to the continuing squeeze on pensioner income from low savings rates and falling annuity rates.”
Around 21% of customers used some or all of the cash to clear mortgage debts showing increasing awareness of equity release as a solution to the interest-only crisis while 28% took money out to help family and friends.
Total funds released across the market climbed 21% to £263.1m from £217.15m and when untapped drawdown funds of nearly £84m – which have yet to be released – are added to the total released was nearer £350 million.
Plan sales climbed 1.3% during the three months to 4,567 from 4,508 but there was a switch in the mix of plans sold.
Around 34% of all plans sold were lifetime mortgages compared with nearly 22% in the same period last year while drawdown took 66% of sales compared with 77% in the first three months of 2012.
Home and garden improvements remained the most popular use of funds with 58% of people used some or all of their cash for those purposes. But the numbers using cash to clear mortgages rose to 21% from 17% and the proportion helping family and friends climbed to 28% from 23%.
Mirfin said: “Equity release has a major role to play in tackling the issue of funding interest-only mortgages into retirement. The launch of plans enabling clients to continue to pay interest and at any time switch to roll up interest has boosted use of lifetime mortgage plans and there is more innovation to come.”
Across the country the total value released rose in all 12 regions with Scotland seeing a 60% increase and Northern Ireland recording a 59% rise just ahead of the West Midlands which saw total value released climb 56%.
In contrast five out of 12 regions saw growth in the total number of plans sold with Scotland recording a 50% increase and the West Midlands a 29% rise. The biggest fall in number of plans sold was 23% in Northern Ireland.