New lending in the equity release market hit £1.5bn in the third quarter of this year, said Key Later Life Finance.

The equity release adviser said that the average customer released more than £114,000 in property wealth to boost their finances.

Sales of equity release plans rose by 29% in the three months to September 30th to 13,341 compared with the same quarter last year.

Customers in London released the greatest amount of equity – on average £261,946.

Why are they releasing equity?

Borrowers said that financial management was the main motivation for releasing equity, with almost two thirds (60%) of the amount released being used to manage debt. This included clearing mortgage borrowing (28%), rebroking an equity release plan (25%) and repaying unsecured borrowing (7%).

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However, one in five customers (20%) still looked to support their families with an average of £53,503 being gifted to help loved ones onto the property ladder, provide an early inheritance, repay debts and even subsidise university fees.

Will Hale, CEO at Key, said: “With over-65 homeowners sitting on an estimated £3 trillion of unmortgaged property wealth and four in five of the customers who progress to speaking to one of our advisers looking to address a financial need there is a clearly a key role for the sector to play in helping older customers navigate through the current economic challenges and still live a fulfilling later life.

“In these market conditions more than ever before, specialist advice is crucial, Advisers must be prepared to probe and challenge customers on their wants and needs, making them acutely aware of the implications of decisions in both the long and short term and ensure highly personalised recommendations aligned to individual circumstances. All options should be considered as equity release won’t be right for everyone.”

Jim Boyd, CEO of the Equity Release Council, added: “The desire to be comfortable in retirement and to help family members is prompting people to think differently about property. For many people, their home is more than simply bricks and mortar: it has become a source of wealth which they have built up during their lifetimes and can lean on when they are no longer earning an income.

“The squeeze on living costs is prompting many people to reassess their financial plans, and equity release is unique in ensuring customers have taken both financial and legal advice to assess their circumstances and needs. In the current climate, taking your time to weigh up your options is more important than ever.”