Retired homeowners whose incomes on savings have been badly hit by low interest rates are unlocking more money from their homes, new figures show.
The average amount that pensioners withdrew under an equity release scheme rose by 16% in the first three months of the year compared with the same period last year, according to industry body Safe Home Income Plans (Ship).
The unlocked money, which now averages £48,287, could be a means for pensioners to offset the decline in investment incomes or a response to the fallouts from the current economic crisis, including a slump in home prices, the group said.
Equity release helps retirees to take out money from their property without having to sell or move. They can do this either through a lifetime mortgage which is not repaid until they die or sell the house, or by selling part of their property to a home reversion company.
Ship director general Andrea Rozario said: "It is encouraging to see how resilient the equity release market is, especially when you consider the fact that consumers have become increasingly cautious about borrowing, and the performance of the financial services sector as a whole.
"While there is a long-term trend towards drawdown products, the first quarter of 2009 saw a greater increase in the number of lump sum mortgages sold as some consumers who may be worried about further house price falls and low savings rates looked to release higher amounts."
Although more money on average is being unlocked, the number of people opting for the equity release scheme had fallen by 14% to 5,074 in the first quarter of 2009 when compared with last year.
Ship said its total value of business at £245.01 million was largely unchanged from £245.01 million during the same period of 2008.
An earlier survey of more than 2,000 pensioners by the group had found that the average interest on savings of £37,000 has dropped to £16 in April 2009 from £158 in the same month last year as interest rates were cut from 5% to 0.5% over the period.
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