In the latest edition of the Equity Release Market Monitor, produced by Key Retirement Solutions, they detail what the money released by equity release gets spent on. The most popular expenditure is household improvements with a majority (56%) of respondents choosing this method. However, this fell slightly by 4% on the previous year. One can see a big increase in the number of individuals using equity release to pay off non-mortgage debt, rising to 35% of those respondents in 2009. This is a 24% increase since 2008 which signals that more people are looking to reduce their debt burden than keeping equity in their homes.

On the whole, the number of new equity release plans were actually down 17% in 2009 compared to 2008. This is unsurprising as property prices were at a low for several months and therefore people were more likely to hold on to equity in anticipation of an increase in prices. Perhaps, more interestingly, is the fact that although interest rates are at an all time low, people are still looking to get rid of their debts. This maybe explained by the increasing financial pressures on people due to the rising costs of living. For example, if one looks at the Office of National Statistics we can see that the cost of food and fuel has risen steadily over the last 12 months.

In addition, the rising cost of living has hit equity release’s typical customer: the elderly. According to a survey conducted by MGM Advantage, individuals between the ages of 64 and 75 had to pay an extra £429 per year to enjoy the same standard of living as they as used to. Perhaps it has got to a stage where any financial relief is welcomed and equity release certainly poses a viable option.