Key’s Equity Release Market Monitor for Q3 2014 shows the UK’s house price boom is making an increasing contribution to improving standards of living in retirement.
Its analysis found 59% of customers use some or all of the cash to fund home or garden improvements and 29% spend money on holidays.
But equity release is also playing an increasingly important role in clearing debts in retirement, with 33% paying off credit cards and loans compared with 30% in the same period of 2013 and 28% paying off mortgages up from 23% last year.
Total equity released in the three months to September 30th soared 32% to £394.8m from £299.8m in the same three months last year, while plan sales rose nearly 6% to 5,858 from 5,548.
The average customer released £67,500 on average compared with £57,286 in the three months to September 30th last year.
On average, those releasing cash owned a house worth £264,600 compared with £248,200 last year.
Dean Mirfin, group director at Key Retirement, said: “The strength of the housing market is giving retired homeowners increased confidence in using the wealth they have built up in their home to fund their retirement.
“For millions of retired homeowners their biggest and most successful investment is their home and it makes sense to release money now to improve their standard of living.
“The evidence shows the money is being used sensibly and invested in home improvements, clearing outstanding debts and helping families.”
More than a quarter of the total value released was in the South East where nearly £102m of housing wealth was paid out.
Plan sales fell in London but total value released increased by 35% reflecting the growth in house prices.
The South East and London combined accounted for 45% of all housing wealth released in the three months but around 31% of total plan sales.