The equity release market passed the £1 billion barrier in 2013 as the third year of growth in the market highlighted confidence in using property wealth as part of retirement planning, according to analysis from Key Retirement Solutions.

The average customer taking out an equity release plan in 2013 released £56,045 –7% up on 2012’s £52,268 which was in turn nearly 7% up on 2011 – as retired homeowners increasingly realised the benefits of using property gains to improve retirement standards of living, the group’s Equity Release Market Monitor 2013 shows.

Total funds released across the market climbed 10% to £1.060 billion from £961.41 million taking the market back to its pre-financial crisis levels. Once untapped drawdown funds of £355 million – which have yet to be released – are added in the total released was nearer £1.4 billion.

Plan sales climbed 3% during the year to 20,331 from 19,675 with lifetime mortgage taking a bigger share of the market than in previous years in part due to increasing use of equity release as a solution for interest-only customers. Drawdown plans, which enable customers to benefit from lower borrowing costs as they can take funds when required rather than in a lump sum, made up the majority of sales.

Around 64% of all sales were drawdown including enhanced drawdown offering better rates to people with health or lifestyle conditions confirming the focus on innovation across the market compared with 31% from lifetime mortgages including enhanced products.

Home and garden improvements remained the most popular use of funds – 58% of people used some or all of their cash for those purposes. But there was a rise in customers using some or all of the money to clear mortgages from 18% in 2012 to 21% last year.

Dean Mirfin, group director at Key Retirement Solutions, said: “Confidence in using equity release and property wealth as part of retirement planning has grown substantially as demonstrated by the rise in average amounts released.

“That has been driven by the market’s focus on developing products which are specifically designed to provide solutions to issues retired homeowners are facing including the interest-only problems that many are dealing with.

“However the strength of the property market is also highlighting the wealth many people have in their homes and how it can be used to tackle issues with retirement income as the wider economic recovery boosts confidence and optimism.”

Across the country 9 out of 12 regions saw growth in the total number of plans sold with Northern Ireland seeing growth of 54% and Scotland recording a rise of 35%. The North of England saw a fall of 8% but the declines in the South East and Yorkshire & Humberside were marginal.

Growth was even stronger in value of housing wealth released with 10 out of 12 regions recording gains with only Yorkshire & Humberside seeing a noticeable fall and that was only 2.5% while the North was slightly lower.

Growth in other regions rocketed with London seeing a 17% increase while East Anglia grew by 31% and Scotland by 36% reflecting the growth in average amounts released. Northern Ireland gained 51% from a low base.