The UK Equity release market is continuing to grow, with a record £1.6 billion of property wealth unlocked between April and June this year, new figures show.

According to the Equity Release Council, the trade body for the equity release sector, the average amount of equity released by homeowners stood at £132,331. A total of £3.1 billion was unlocked by homeowners in the first six months of 2022, a 36% increase on last year’s £2.3 billion. Find out more about equity release in our guide Equity release – what is it and how does it work?

The Equity Release Council research, published today, also found that lump sum lifetime mortgages have surpassed drawdown plans in popularity for the first time in 13 years. More than half, at 54%, of new plans agreed during this period were lump sum lifetime mortgages. A drawdown lifetime mortgage is a type of equity release plan that enables you to release equity when you like, rather than in a single lump sum.

The research found that more than 200 people a day are taking out equity release loans, with the majority of these customers aged between 68 and 70.

David Burrowes, chair of the Equity Release Council, said: “The fact that hundreds of homeowners are now choosing to release equity each day, based on detailed financial and legal advice, is significant progress from the days when the market was considered an under-developed niche rather than the mainstream option it has become.”

Why have lifetime mortgages become so popular?

Lifetime mortgages make up the vast amount of equity release plans taken out by homeowners, and these plans can be incredibly helpful in the right circumstances. For example, the funds can be used to pay off debts with high interest rates, or simply to boost retirement income when living costs are soaring.

Experts say that the growth of the equity release market may partly be attributed to the rising cost of living and the current economic climate. With inflation climbing to record highs, soaring energy bills and rising mortgage rates, homeowners may be taking lump sums of equity to meet essential costs. Recent data by equity release advice firm Key, for example, shows that 40% of equity release customers used some or all of their funds to repay an outstanding mortgage.

Steve Wilkie, executive chairman at mortgage broker Responsible Life, said: “As bills rise and interest rates climb, later-life borrowers have released more equity than ever.

“There is huge uncertainty for retirees. Eye-watering rises in the energy price cap continue to focus minds. Homeowners are preparing for what is set to be a once-in-a-generation squeeze on disposable incomes early next year.”

Experts warn that taking money out of your property can have a number of implications for tax, benefits, inheritances and long-term financial planning. Equity release products come with risk and won’t be suitable for everyone. Current rules from the financial services regulator the Financial Conduct Authority (FCA) require you to speak to a qualified financial adviser before you are able to take out an equity release product to ensure it’s suitable for your circumstances.

The main risk is that you or your estate could end up paying back a lot more than you borrowed, as interest charges mount up over time, with interest charged both on the original sum and the interest added over time. This is known as compounding. Read more in our article Equity release – what are the risks?.

However, equity release can be the right solution for some to meet living costs. There are plenty of other reasons for releasing a lump sum of equity using a lifetime mortgage, such as wanting to help out relatives who are short on cash, or help children climb onto the property ladder.

Stuart Lewis, chief executive officer at Rest Less, said: “From an emotional perspective, the pandemic has made people reflect on what they want from life. People see their kids struggling to get on the property ladder and how hard the pandemic has been for many of them, so they are looking for ways to transfer wealth while they are still young enough to benefit from it.” Read more in our articles Can I take money out of my property to give to my children? and 8 questions to ask yourself if you’re considering equity release.

If you’re looking for somewhere to start, you can get expert advice from a Rest Less Mortgages equity release specialist. They are active members of the ERC and can advise on equity release mortgages from the whole of the market. They’ll listen to your needs and talk you through your options, so you can decide if equity release is the right option for you.

Where can I learn more about equity release?

If you are interested in equity release and would like to learn more, our Equity Release section covers everything you need to know.

If you want to see how much you might be able to release from your home and how much it could cost, this equity release calculator can give you an estimate. Fill in a few details to get an estimate.