Equity release loans have dropped by almost a quarter in the past year, due in part to falling property prices.
Homeowners spooked by falling property prices are turning away from equity release loans, according to one provider.
Key Retirement Solutions found that there had been a 24 percent decline in the market between January-March 2009 and the same period last year. In all, the total amount of equity released over the three-month periods fell from £240 million to £183 million.
Property prices have a bearing on the attractiveness of equity release loans in the minds of many customers. This is because they are borrowed directly against equity held in a home - in other words, the part of a property's value that is held by the homeowner rather than the mortgage lender.
Equity release is therefore particularly popular among older people who have already paid off their mortgages and own all of the equity held in their home outright.
Key Retirement Solutions cited the 16 percent fall in house prices over the past year as the main reason for the drop-off in the market. Additional data from the report show that the total number of equity release plans taken out fell by seven percent.
Dean Mirfin, Key Retirement Solutions group director, said: "Those considering equity release may be waiting for property prices to improve, but this could well prove to be a false economy. We only get one chance at retirement and it is important that those considering equity release do not delay, time is something we can't buy back."
The annual decline measured by the firm is the largest since it began compiling the figures in 1998.
