Pensioners unlocking more cash from their homes

Retired homeowners withdrew 205m from their home during the three months to the end of September, according to trade body Safe Home Income Plans (Ship).

The figure was 4 per cent more than during the previous three months, ending three consecutive months in which the market contracted, while it was also the biggest quarter-on-quarter rise since mid-2008.

There was also an increase in the average amount of money individuals unlocked, with this rising by more than 1,000 compared with the previous quarter to 46,754.

Andrea Rozario, director general of Ship, said: "The equity release market has returned to growth with the largest quarter-on-quarter increase since mid-2008.

"The financial services industry has had a tough couple of years and this move clearly illustrates increased customer demand. This quarter's figures provide us with a strong platform for growth in the remainder of 2010 and a firm foundation on which to expand the market in 2011.

"In addition, the cuts announced in the recent spending review will hit all sectors of the population and may lead to more people seriously considering equity release."

Equity release enables retired people to take out a mortgage against the value of their home, which does not have to be repaid until they die or sell the property.

Drawdown mortgages, which enable people to access money in stages, continued to grow in popularity, to account for 57 per cent of the market during the quar- ter.

But products that enable people to take the money as a lump sum fell to 41 per cent of the total, down from 56 per cent two years ago.

The group said it thought that the change may be due to some consumers being reluctant to unlock signifi- cant sums of equity when the future direction of the property market remained uncertain.