Continuing growth in the number of equity release product options available to homeowners means obtaining specialist later life advice is crucial, according to Key.
The over-55s adviser said historically low rates and a wide range of products with innovative features mean that those who want to help themselves by accessing the value tied up in their home have a range of options.
But it warned that making the wrong choice around whether to borrow, how much to borrow and how to borrow can have long term consequences.
It comes as Key’s Equity Release Market Monitor reveals 11,772 plans worth £886.59m were taken out in the third quarter of 2019, with an additional £368.58m reserved for future use as current economic and political turmoil encouraged customers to be cautious.
The volume of plans taken out is 8% up quarter on quarter but 3% down on a year ago.
Drawdown products (both enhanced and standard) now account for 75% of all equity release plans sold, up from 62% a year ago.
There has been a year-on-year decrease in the average initial amount released from £60,922 to £58,729, which Key said suggests consumers see real benefit from the flexibility offered by these products as they remain cautious and keen to manage their borrowing carefully.
The increasing popularity of drawdown products also resulted in the overall average amount released fall from £76,967 to £75,300 on an average loan to the value of 24%. Lump sum lifetime mortgages made up 25% of sales, including 9% of enhanced plans.
The over 55s’ desire to manage their borrowing carefully is also evident in the increase in the number of people who are choosing to remortgage their equity release plan to release more funds or save money – from 3% in Q3 2018 to 5% in Q3 2019.
Will Hale, chief executive at Key, said that while the market is not seeing the double-digit growth of recent years, it continues to prosper with quarter three being the strongest quarter this year.
“The growth in popularity of drawdown, the smaller amounts released and the increasing numbers of customers looking to remortgage, all points to borrowers who see the value of using their housing equity but want to do this as cautiously and responsibly as possible,” he added.