Equity-release lending shot up by 121 per cent in the first half of this year compared with 2002.
The figures from the Council of Mortgage Lenders, based on returns from 21 lenders active in the equity release market, show that £498m was borrowed by older homeowners in equity-release mortgages – more than double the total of £225m recorded in the first half of 2002.
The CML says around 11,700 equity-release loan were taken out at an average value of £43,000.
The equity-release market still represents less than 0.5 per cent of the total residential mortgage market but the CML believes this is set to change, with industry estimates suggesting a realistic potential market size of £50bn-£100bn.
Director general Michael Coogan says: “Older people are increasingly in a situation where most of their wealth is tied up in their home.
“Equity release can make a lot of sense for some of these owners, especially if they do not want to move or trade down. The key priority is to make sure that these borrowers, some of whom may be vulnerable, truly understand the nature of an equity-release mortgage.”
Mortgage Express head of business development Tim Sturley says: “All the demographics show that this is a growing market. With an ageing population, it is going to be a strong market and we will be entering it in the near future.”