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More than 76,000 new and returning customers were recorded in 2021, according to the Equity Release Council. Around £4.3billion was taken out in new plans, with another £500million going to returning customers.
Average loan sizes were on the increase, partly influenced by rising property prices and more wealthier customers using equity release as part of their financial planning.
David Burrowes, chairman of the Equity Release Council, said:
"Cost-of-living pressures are just one of many reasons why homeowners are choosing to cash in on years of wealth accumulated in their homes.
"Increasing loan sizes partly reflect the rise in house prices and a more affluent type of customer using lifetime mortgages to plan their finances or gift a living legacy to family members.
"Having proved itself to have solid foundations through a period of uncertainty, the equity-release market's return to growth has just as much to do with trust and innovation as it does with external factors as households look to manage their finances in later life.
"Equity-release products have continued to evolve in recent years with new providers and features adding to their appeal.
"Increasingly, flexibility has brought lifetime mortgages closer to their residential equivalents - by offering capital or interest-payment options alongside long-term, time-honoured protections against rising interest rates and negative equity."
Annual equity release lending surpassed the previous record set in 2018 of £3.94billion.
A total of 11,013 new plans were agreed between October and December 2021.
This made Q4 the busiest quarter of 2021, reflecting normal seasonal patterns, and the second-busiest of the Covid-19 pandemic period after Q4 2020 when 11,566 new plans were agreed.
Three in five new customers opted for drawdown lifetime mortgages in Q4.
Lump-sum lifetime mortgages made up 43% of new plans agreed in 2021.
New customers agreed similar amounts of borrowing via drawdown and lump-sum products during 2021.
The average lump sum plan was £124,990, while the typical drawdown plan featured an up-front amount of £89,786 with £34,950 held back for future use.