Rising property prices mean pensioners are cashing in and boosting their retirement income by an average £67,500.

Key Retirement studied many of the underlying trends amongst those releasing equity from their homes. Its 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. Key’s 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 it found 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 £394.8 million from £299.8 million 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 £102 million 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.

The total amounts released rose in 10 out of 12 regions across the country, while plan sales rose in 8 out of 12 regions. But growth in Northern Ireland was particularly strong where total value released increased by more than 160% and plan sales increased by 86%.

Standard drawdown plans accounted for 55% of sales compared with 60% in the three months to September 30th last year while single advance lifetime mortgages made up 35% of sales compared with 31% previously. Enhanced drawdown and enhanced single advance lifetime mortgage plans, which offer higher loans to value to people with lifestyle or medical conditions, accounted for 10% of the market.