The figures come from Key’s 2021 Equity Release Market Monitor which also shows that customers withdrew an average of £104,792 from their homes. The cash was primarily for helping family and repaying debts.

According to Key, about one in five (19%) equity release plans taken out in 2021 was used to support family while two in five (38%) were used to repay residential mortgages or remortgage existing equity release borrowing.

Key said this major new trend developed as existing customers realised how they could benefit from the lower rates and increased flexibility offered by modern equity release products driving a 174% year-on-year surge in re-broking.

While the number of equity release plans taken out increased by nearly 4% in 2021 to 41,991 (40,470 in 2020), it was still lower than the record reached in 2018 (47,081). The 28% growth in the value of the market was driven by customers releasing larger amounts.

Over-55s released an average £104,792 worth of housing equity via equity release during 2021 – an increase of 23% on the previous year and 37% higher than 2019 before the pandemic started.

Remortgaging became much more important in 2021 with about 5,295 equity release customers moving for lower rates compared with 1,930 remortgage cases in 2020. The average customer moved a balance of £135,529 from an interest rate of 5.1% to 3.6%, and the volume of cases accounted for 22% of all equity released used for debt repayment.

Existing customers took out an additional £494.48m last year in drawdown and further advances, and customers used drawdown plans to reserve a further £1.32bn during 2021. Drawdown plans accounted for 74% of sales last year compared with 70% in the previous year, while lump sum mortgages accounted for 26%.

Key found the number of customers using property wealth to pay off mortgages nearly doubled from 20% in 2020 to 38% last year, while the numbers using it to pay off unsecured debt remained steady at around 27%.

Will Hale, CEO at Key, said: “To record this type of growth against the backdrop of a pandemic suggests that the equity release market is starting to live up to the potential that we have been highlighting for so long and is becoming a true later life lending market.

“We’ve seen a subtle shift away from discretionary spending with more customers focusing on using their housing equity to improve their financial resilience by repaying or remortgaging borrowing while others have concentrated on supporting family. The growing desire to move existing equity release borrowing to a better rate has been a feature of 2021 and we see this becoming an increasingly normal part of the market.

“Looking ahead, with customers having focussed on meeting pressing needs over the last 24 months, we anticipate that there will be pent up demand for discretionary spending amongst some over-55s who have found that their retirement is currently very different from what they anticipated. However, this is likely to be tempered by inflationary pressures and increasing numbers of customers seeking to boost their or their families spending power to meet rising household bills.

“The later life lending market is able to support these wide-ranging needs and this will be good for consumers, the market and the wider economy as we move through 2022.  As an industry, we must rise to the challenge of supporting our clients by continuing the evolution that has seen significant growth in innovative products and options for customers.”