The number of pensioners unlocking money from their home to repay debt has tripled during the past year, research showed today.
Around 35 per cent of retired people who released equity from their home during 2009 did so to repay non-mortgage debt, up from just 11 per cent in 2008, according to Key Retirement Solutions.
But the most popular use for the money was to carry out home or garden improvements at 56 per cent, down from 60 per cent in 2008, while 33 per cent used the money to go on holiday and 25 per cent used it to treat or help family and friends.
One in five people said they needed the extra money just to keep up with regular bills.
Equity release enables retired people to unlock money tied up in their home without having to move.
They can do this either by taking out a lifetime mortgage, which is not repaid until they die or sell their home, or by selling a portion of their property to a home reversion company.
The group said there had been a 17 per cent drop in the number of equity release plans taken out during 2009 to 21,305.
It added that the amount borrowed also fell by 14 per cent to £1.02 billion. It attributed the drop to a combination of lower house prices and the reduced number of plans taken out, as well as the increased popularity of drawdown plans, which enable people to take their money in stages.
Dean Mirfin, group director of Key Retirement Solutions, said: "2009 has been a challenging year for all sectors of our industry.
"The equity release sector has not been immune to the effects of the current economic climate as is evident from the results for the year.
"The main measure for the result is the number of new plans, and whilst a 17 per cent fall is considerable, the positive to take from the result is the fact that this level was maintained throughout the year, and that demand continues to be strong as we enter the first quarter of the new year."
* The figures are based on the business done by Key Retirement Solutions during 2009 and are adjusted to reflect the wider market.