"Equity release has come to the rescue, stepping in to provide a viable guaranteed income stream, that annuities used to deliver."
Homeowners are taking advantage of falling lifetime mortgage interest rates, releasing over £80,000 on average in September, according to Responsible Equity Release figures.
Last month, UK homeowners released an average of £86,361 - a record level for any single month. Q3 also saw the total amount of equity released by homeowners rise substantially, up 40% on the previous quarter. Total equity released between July and September 2017 was also more than double (142%) the amount released during the same period in 2016.
Responsible Equity Release has attributed this rise to innovation in the market, including a product designed for releasing equity on buy-to-let properties.
Property owners also agreed an average additional borrowing facility of £43,385, to draw from if and when needed. That took the average equity release plan amount in September to just under £130,000.
Regionally, homeowners in Yorkshire and the Humber took out an average of 75% more equity from their properties in September compared to August.
Northern Ireland saw the biggest monthly rise in the average amount released by individual homeowners in September vs August, up almost two thirds (64%), while the total amount released more than tripled (228%) last month compared to the previous month.
Despite London house prices cooling, that doesn’t appear to have dampened demand in the equity release market as the amount of equity released by individual homeowners came to £219,221, up 13% on August.
Steve Wilkie, managing director at Responsible Equity Release, commented: “Although the Bank of England has indicated that an interest rate rise is imminent, the reality is that even a 1% rise, which is unlikely in the short term, will repair the damage suffered by Britain’s pensioners who have seen their savings deliver very little income over the past decade.
“And where annuities could have taken up the slack in the past, many pensioners over the past couple of years have chosen to give up the guaranteed income that annuities offered, instead choosing to keep their pensions invested. However, when investments aren’t performing, as they haven’t been doing recently, pensioners are having to turn the drawdown tap off to avoid eroding their pension pots.
“That leaves pensioners facing an income drought, and equity release has come to the rescue, stepping in to provide a viable guaranteed income stream, that annuities used to deliver. Homeowner are able to utilise an asset that has grown substantially in value over their lifetime, and actually make it work for them and their family during their lifetime.”