This compares with 25% of those who have repaid their mortgage.

Jon King, managing director of More 2 Life, said that it is seeing a shift in attitude among people with mortgages, who are realising that their property wealth should play a role in retirement income.

King said: “On the face of it, conditions for growth in the equity release market are perfect with a change in attitudes as well as factors such as rising longevity meaning people will need income to last longer if they want a comfortable retirement.

“However, the industry needs to innovate and make its solutions more flexible and relevant for customers and adapting to changes in lifestyle.”

The three biggest lenders, LV=, Aviva and Just Retirement, have all reduced their rates recently with LV=’s 0.10% reduction being the latest.

Lifetime mortgages are the most popular type of equity release. The interest rate is fixed for life removing the risk of interest rate hikes in the future.

The interest typically rolls up as most equity release borrowers don’t want or cannot afford a monthly payments. However Stonehaven’s Interest Select Plan provides the option to pay some or all of the interest for those who can afford it.

As always, please contact me if you would like any further information.

The IF thinks this could free up some of the 25 million empty bedrooms in England alone.

The campaign group is promoting “a proper land tax, to reflect the social cost of occupying housing, particularly housing that is larger than one’s needs”.

Surely where someone lives should be a matter for personal choice and not influenced by punitive taxes.

My experience is that many people own small to medium houses. They could move from a 3 bed semi to a 2 bed flat but the financial benefits in return for the loss of living space and a garden are debatable. Added to this is the sheer human cost of moving house; it is one of the most stressful things someone can undertake, whatever their age.

As we get older we have acquired more possessions; books, records and CDs, photos, paintings, football and concert programmes; it all takes up space.

Some will have family and friends to stay over so that spare room is needed.

This is why many choose to keep the family home and take an equity release plan to supplement their pensions and savings.

If someone wants to downsize they should be, and of course are, free to do so. I would be happy to see help and support offered to those wanting to move but who find the whole prospect too daunting. But the idea of a “land tax” to bully people out of their own homes is not palatable to me and would, in my view, be politically unpopular.

So strong are the emotional ties of a long term family home that some homeowners would be forced to borrow to meet any tax increases. It is a false assumption that people in larger houses are wealthy. Many of them have modest income and are very much “asset rich and cash poor”. Having to take equity release to pay tax would be a sorry state of affairs indeed.

David Wright

Equity Release Specialist & Managing Director

Sixty Plus

Rising inflation, a substantial part of which has been caused by sharp increases in energy prices, puts particular pressure on retired homeowners with fixed pension income.

A growing number of people are in fuel poverty, defined as spending more than 10% of income on heating.

Equity release can provide tax free cash from people’s homes enabling them to improve their standard of living and enjoy financial security.

This is another pointer as to why equity release plans are expected to rise in popularity.

People’s fragmented working lifetime, with few people working for one employer throughout their career, means they may not be accruing sufficient pension rights.

However pensions are not the only way to fund retirement.

Equity release, via a lifetime mortgage or home reversion plan, can be a a useful way of releasing some of the capital tied up in property to top up pension income.

The Bank of England’s target rate is 2%, and it expects it to target within two years.

The Retail Prices Index increased to 5.2% from 5%.

Retired homeownerswith a fixed income are particularly affected by inflation. Although state pensions and many occupational pensions are index-linked, annuities purchased from private pensions often provide a level income. This level income effectivelyloses value so long as inflation exists.

One solution to this problem is equity release. A tax free cash sum can be used to afford the extras that are otherwise out of reach. Furthermore a plan with a drawdown facility provides access to additional funds in later years should they be required.

Aviva showed that, as the cost of living has risen alongside house prices, equity release has become an increasingly popular method of supplementing pensions in retirement.

Aviva said that the most valuable asset many over-55s have is their home, with an average house price for this age group of £231,306 compared to the national average of £160,519.

Clive Bolton, at retirement director at Aviva, said: “Despite the British taboo of discussing inheritance, it seems that three-quarters of Britons are happy for their parents to use the cash in their property to enjoy a better lifestyle in retirement. Retirees should be encouraged to talk openly with their families about their plans and dreams for the future.

“Not everyone has the funds in place to support the retirement they once thought possible and we encourage those approaching retirement to look at their full range of assets, including pensions, investments and property.

“Equity release could be a solution for some, as it allows people to turn the potentially dormant capital in their homes into cash without having to move, thereby helping them make the most of their retirement years.”

‘Currently there are 3.2million older householders living in non-decent private sector homes.’

Partnership recently launched a lifetime mortgage with enhanced sums available to people with medical of lifestyle issues including diabetes and cancer.

Vanessa Owen, head of equity release at LV= said “It is excellent to see innovation back in equity release. The Partnership proposition is clearly very attractive in the domiciliary care environment.”

Darren Dicks, head of annuities at Aviva, says: “We are looking at enhanced equity release very closely and I think there is a market there.

“If someone has a shorter life expectancy the debt is not going to accrue for a long period of time, so it could have an impact on the amounts we could offer.”

The enhanced lifetime mortgage offers increased amounts to people with long-term illnesses such as diabetes and cancer. Smokers will also be able to secure improved terms.

The product is available to property owners aged 60 and over whose property is worth at least £70,000, with a minimum cash release for the mortgage of £25,000.

A short online questionnaire will be used to confirm they are eligible.

Partnership managing director of equity release Ged Hosty says: “Equity release provides a much needed source of income for people in retirement who find themselves without adequate pension provision but have substantial equity in their properties.

“We have refined this concept to benefit people with compromised health conditions.”

Sixty Plus comment: A new product launch is always good news because it brings greater choice and competition. One of the most common barriers to equity release is the amount of money needed, especially if it is to clear a mortgage or other debts. Any plan that facilitates larger amounts is welcome.