The number of retired people unlocking money from their home continued to rise during the third quarter despite the global credit crunch, figures showed yesterday.
Just under 8,000 people took out equity release plans in the three months to the end of September, 15 per cent more than during the same period of 2006, according to industry body Ship (Safe Home Income Plans).
At the same time the value of new business written by Ship members reached £325.3 million, the highest quarterly figure since 2005.
The rise meant that during the year to the end of September people either unlocked or arranged to unlock £1.24 billion from their homes.
Equity release enables retired homeowners to unlock money tied up in their homes without them having to move.
They can either take out a lifetime mortgage against their property which is not repaid until they die or sell their home, or they can sell a portion of their property to a home reversion company.
Ship, whose members account for 90 per cent of the equity release market, said the number of people taking out home reversion schemes increased during the third quarter as predicted after they came under the regulation of City watchdog the Financial Services Authority in April.
This helped to boost sales by 20 per cent during the three months to the end of September compared with the same period the previous year, with new business accounting for £21.9 million of the total value of equity release schemes taken out. At the same time the number of people opting for drawdown mortgages continued to increase in popularity with these products now accounting for 51 per cent of all equity release plans taken out, compared with only 26 per cent a year earlier.
Drawdown mortgages enable people to agree the size of an equity release mortgage when they first take out their loan, but they only borrow the money when they need it, meaning they can draw it down gradually.
New business for drawdown loans, which have been regulated by the FSA for some time, totalled £214.8 million during the quarter.
Jon King, chief executive of Ship, said: "This quarter's figures demonstrate the continuing growth of the equity release market and its resilience to the present economic climate. Equity release has the ability to ride out market turbulence and is set to increase in size by the end of the year."