Key Retirement has reported that equity release customers are saving up to, or in excess of, £70,000 as increased competition drives record growth in property wealth being used to boost the standard of living in retirement.

The firm has found that the cost of raising money through lifetime mortgages, the most popular form of equity release, has dropped dramatically over the past five years. A customer today releasing the average amount of £70,625 could save as much as £70,000 in interest over 20 years.

In 2012 a total of £832 million of property wealth was released, as 19,675 plans were sold.

Key’s Market Monitor for the first half of this year shows total property wealth released is 50% higher than the whole of 2012 at £1.246 billion and plan sales were 17,656, as nearly 100 customers a day used equity release to improve their standard of living.

The analysis shows that for the current average loan and typical customer profile, customers would have repaid £223,109 over 20 years at the 2012 rate, compared with £152,954 at today’s rate – a saving of £70,155 in total.

The table below shows the savings over five, 10, 15 and 20 years.

Source: Key Retirement, August 2017

Dean Mirfin (pictured), technical director at Key Retirement, said: “Retired homeowners are benefiting from record growth in the equity release market, as increased competition drives down the cost of borrowing.

“The example shows the fall in rates over the past five years has been significant and is helping more customers support their family, as well as themselves, as equity release makes a major contribution to the retirement standard of living.

“Existing customers can also take advantage of falling rates but it is important they ensure they take independent specialist advice before making any decisions to switch as savings from lower rates need to be balanced against any early repayment charges.”