Pensions are rushing to release cash from the value of their homes at the fastest rate ever, according to industry experts.
Homeowners are taking £6.8 million a day as equity release.
So far this year, they have cashed in £1.58 billion, compared to £1.71 billion in 2015, says financial firm Key Retirement.
With just three months left in 2016 and 92% of last year’s total already withdrawn, the industry expects to surpass the 2015 record for equity release to be quickly surpassed.
A record year has also seen the number of over 55s taking money from equity release increase by a third and the amount of cash withdrawn up by 35%.
Money spent on homes, holidays and debts
In the third quarter, 8,348 homeowners took £633.8 million in equity release at an average of £75,900 each.
Amounts varied according to need and property values, with the highest average withdrawal of £135,886 in London, where house prices are the most expensive.
Homeowners mainly spent the money on home or garden improvements (82%), up from 61% in the same period last year.
The other popular expenses included clearing loans and credit cards for 41% of over 55s, compared with 30% in 2015 and paying for holidays (34%) and clearing mortgages (21%).
Key Retirement technical director Dean Murfin said: “Equity release has almost matched the record performance of 2015 in just nine months, highlighting how property wealth is enhancing retirement planning as low gilt and interest rates squeeze other options.
No tax on equity release money
“The growth in the average amount released by retired homeowners is making a major difference to lifestyles with the detailed breakdown showing how most are using the cash to improve their homes while paying off debts and boosting income.
“The market is on course for another record year with rate cuts for loans and new providers entering the market providing further momentum. The results also show that demand for tapping into housing equity is very much increasing throughout the UK with most regions recording record growth in plan numbers and total lending.”
Equity release comes as lifetime mortgages or home reversion plans. Almost two-thirds of homeowners opt for a drawdown lifetime mortgage, which lets them take irregular cash up sums.
Cash from equity release can be spent however the homeowner wishes and is not subject to income or capital gains taxes.