Equity release advances for the first quarter of 2012 were up 10% on the same period of last year. Advances totalled £199.1 million were made by SHIP members.

The number of plans also increased year on year by 6% to 4,057 from 3,838.

There was the seasonally expected fall of 8% on the last quarter in terms of value of plans and volume of plans.

The proportion of customers choosing to access their equity in smaller tranches has increased over the past quarter. Drawdown mortgages now account for 67% (Q1 2012) of the market, followed by lump sum mortgages (32%) and home reversions (2%).

SHIP says this increase in popularity of drawdown mortgages over the last quarter (62% – Q4 2011), to the highest level since Q3 2008 (72%), is likely to be the result of more people choosing to use equity release to supplement a monthly income, rather than pay for one-off expenditure.

The proportion of equity release plans sold through intermediaries remained level with last quarter at 90% (Q1 2012), at a value of £179.5 million, and compared with direct sales of £19.6 million (10%). This remains at the highest level since SHIP started tracking this data (Q1 2003) and continues to reflect the importance of intermediaries in the market.

Andrea Rozario, director general of SHIP, said: “These figures are extremely encouraging and show that the market is continuing to grow steadily, year on year. Furthermore, the increase in the number of customers electing to drawdown their housing wealth in stages reflects the growing awareness for the different uses of housing equity – such as supplementing an existing income.

“This year is a significant and exciting one for SHIP, as we expand our membership to include members from across the equity release industry. This will allow us to provide an even more comprehensive look at equity release sales figures in the future through the expansion of data available from new members.

“These figures show that there is a growing appetite amongst consumers for equity release products, and by bringing together organisations from across the industry we will ensure that we are well placed to meet this demand”.

Darren Dicks, head of retirement at Aviva, said: “While we saw the traditional seasonal fall between Q4 2011 and Q1 2012, it is great news that there has been a 10% year on year increase in the value of plans sold. This shows that the market is firmly back on track and bodes well for the remainder of 2012.

“It is also interesting to note the swing towards drawdown mortgages which now account for over two-thirds of all plans sold. In today’s uncertain environment, it appears that consumers feel more comfortable reserving an amount they can call on as and when they need it, rather than taking out a large lump sum.

“Equity release is becoming an increasingly common retirement planning tool and we expect to see the market continue to grow as more and more people rely on their housing equity to meet the cost of their later years.”