The number of equity release plans taken out rose by 3% in the six months to 30 June.
Older homeowners received a £1.94bn property wealth boost in the first half of the year, as the equity release market continued its lockdown recovery, data from Key shows.
The number of equity release plans taken out rose by 3% in the six months to 30 June, up to 20,445 compared with a year ago, as the total value of new equity released rose by 32% - from £1.47bn to £1.94bn.
In addition, a further £666m was reserved for future use.
Customers focused on meeting ‘big ticket’ expenses like mortgage and unsecured debt repayment, at an average of £74,894, and gifting at an average of £72,520, rather than holidays, which averaged £16,458, and home improvements, which averaged £16,907.
As a result, the average amount of equity customers are releasing has increased to £94,982 from £72,340 year-on-year.
With the value of a typical home used for equity release up 15% from £321,209 to £368,883, loan-to-values (LTVs) have remained relatively stable at 26% compared with 23% in H1 2020.
The total value of new equity released at £1.94bn was higher than the £1.68bn released in the first half of 2019 before the onset of COVID-19.
More than half of the proceeds of equity release (52%) were used to clear mortgages (45%) and manage unsecured debts (7%) while 23% was used to help family and friends.
An average of £74,894 of borrowing was repaid and £72,520 was gifted.
More than half of people who used their equity to support wider family and friends used it to provide a house deposit (52%) or an early inheritance (59%).
The data revealed an increase in the amount of money used for property purchases – around 7% of the total value released went towards buying homes with the average customer taking out £115,068 to boost their buying power
Around 71% of customers took out drawdown plans in the first half of the year, with customers taking an initial average amount of £56,744 and customers reserving another £666.4m for future use.
During the same period, 14,589 existing customers returned to take out an average of £13,765 to support their retirement finances.
Every region apart from Northern Ireland saw the value of property wealth released increase.
London recorded the biggest increase at 74%, while Wales recorded a 42.1% rise and another seven regions saw double digit gains.
Wales recorded the biggest rise in plan sales at 24.1%, followed by London (22.6%), while a total of seven out of the 12 regions saw increases in plan sales.
The South East and London accounted for just over £1bn of all equity released - more than half the total across the UK during the six months - despite accounting for only 34% of plans sold.
Will Hale, chief executive at Key, said: “The equity release market is benefiting from the success of the vaccination programme putting the country back on the delayed road to recovery with total value released up strongly and the number of plans taken out increasing.
“Big ticket items like repaying outstanding mortgages, managing unsecured debt and helping family members get their foot on the property ladder is what motivates customers.
"This is intergenerational fairness in action and equity release customers provided almost £1m per day in deposits during the stamp duty holiday.
“Drawdown plans remain dominant and with over 710 different products on the market, those who choose equity release to manage their borrowing benefit from more flexibility than ever – including the opportunity to make ongoing interest and fee free capital repayments.
"That said, customers need to speak to a specialist adviser who can help them make smart sustainable choices around if, when and how to borrow in retirement.”