The number of retired people unlocking money in their home has dropped by 16%, according to figures.

As the credit crunch bites equity release advisor Key Retirement Solutions says 18,910 equity release plans were taken out during the nine months to the end of September, 16% fewer than during the same period of 2007.

The group said the current financial crisis and falling house prices are the reason behind the reduction.

However, the group said the rate of decline had slowed during the third quarter, with figures for the three months to the end of September only 10% lower than for the corresponding period of the previous year.

£340 million was unlocked by retired people during the third quarter, 7.5% less that 2007.

Despite the fall, those who did take out equity on average withdrew 5% more - £52,298 - than last year.

Dean Mirfin, business development director at Key Retirement Solutions, said: "Naturally 2008 is proving to be a challenge for all sectors of the financial services industry."

Equity allows retired homeowners to release money from their property without having to sell or move. This can be done by taking out a lifetime mortgage, which remains unpaid till they die or sell thier home, or by selling a proportion of the house to a home reversion company.

Draw down plans remained the most popular accounting for 62% of the market. These plans enable people to borrow money as and when they need it, rather than having to take out a lump sum.

The home reversion plans continue to fall in popularity and account for just 4% of the total of plans taken out. Down by 3% in the third quarter of 2007.

Yorkshire and Humberside saw the biggest drop of 33% but, nine of the UK's regions saw a fall in the number of people taking out equity release plans.

The main reason credited for people unlocking equity was to carry out improvements to their home, cited by 59% of people, followed by holidays and debt repayments.

Although, 22% of people said they took out a plan to help friends and family.

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