Equity release plan sales rose 3.36% in 2010 as the increasing use of drawdown reversed three years of market decline, according to equity release adviser Key Retirement Solutions (KRS).
Its Equity Release Market Monitor showed the total number of new plans rose to 22,020 compared with 21,305 in 2009, the first rise since 2007.
However, the rise in popularity of drawdown plans, which now account for nearly three-quarters of all sales compared with two-thirds in 2009, meant the amount of housing wealth released by homeowners fell 11% to £910.6 million from £1.02 billion in 2009.
KRS says customers taking out drawdown plans benefit from lower borrowing costs because they are able to draw funds when required in tranches when they need it rather than in a one-off lump sum, as a result the average amount released reduced to £43,519 from £48,212.
59% of customers used some of the money to carry out work to their home and/or garden in 2010 compared with 56% in 2009 and 34% used equity release for holidays last year compared with 33% in 2009. 23% continue to prioritise helping out their families who may well be struggling more as a result of the economic crisis.
Dean Mirfin , group director at Key Retirement Solutions, said: “Customers are benefiting from the flexibility and favourable terms offered by drawdown and overall the equity release market was able to end three years of decline last year in the number of plans sold.
