The report also shows that the total value of UK private property passed £6trn for the first time at the end of 2020.
Total national mortgage debt has continued to rise towards a record £1.5trn, but the average LTV has dropped to the lowest level since before 2007/8.
The number of equity release products available to consumers has risen to record highs with over a 100 new products added in H2, a total of 488 products were available by the end of 2020.
Access to retirement interest-only mortgages also improved last year, with more than 100 products available for the first time.
The average lifetime mortgage product rate reached a record low of 3.95% in January 2021, with a quarter of products now offering rates of 3% or lower.
The volume of new equity release plans taken out rose 19% during H2 2020, compared to the first six months of the year as consumer confidence and businesses showed resilience, noted the ERC.
As well as this, over-55s withdrew 46p of property wealth for every £1 of flexible pension payments in H2 2020, in line with 2019 as property plays an important role in the retirement funding mix.
David Burrowes, chairman of the Equity Release Council, said: “After the unprecedented upheaval of early 2020, the equity release market showed signs of recovery as households and businesses remained resilient against a challenging backdrop.
“Property wealth ranks second only to pensions in terms of its importance to household finances across the country. The transformation of later life mortgage products in recent years has given people more opportunities to access property wealth at affordable rates.
“Accessing property wealth will play a vital role in retirement planning, both now and in the years to come.
“For today’s retirees, it can make the difference between making ends meet or enjoying a more comfortable lifestyle by boosting their pension income, improving or adapting their homes life and paying for domestic care support.
“For younger generations, it can open up the possibility of receiving a ‘living inheritance’ to support their own financial goals, such as getting on the property ladder.
“2021 is a milestone year that marks the 30th anniversary of the first equity release standards. Today’s market has added choice and flexibility to the robust protections and guarantees that give consumers confidence that modern equity release is safe and reliable.
“We will continue to work with industry, government, policymakers, regulators and consumer bodies to ensure the products and advice available continue to serve customers’ changing needs.”
Alice Watson, head of marketing and insurance at Canada Life, added: “Today’s findings from the Equity Release Council evidences not only the resilience of the industry but also the consumer’s desire for retirement flexibility.
“Property wealth is increasingly being viewed as a component of modern retirement journeys, working alongside existing pension savings, rather than being a question of using either/or.
“Fewer people are following the ‘traditional’ journey of retiring with a comfortable pension and no mortgage debt, and as a result, the retirement market is undergoing a significant change.
“Whilst releasing equity from a property remains a very significant decision, we know that families across the country are seeing strains on their personal finances, whether that’s from redundancy, rising living costs or caring responsibilities.
“This collective strain is likely to continue being exacerbated by the pandemic and, with the right advice, equity release has proven it can help people to access their property wealth flexibly and safely.”
