The number of plans sold last year totalled 22,020 compared with 21,305 in 2009 when lending was £1.02bn.
The rise in volume and simultaneous decline in the value of lending in the sector is due to 74% of people opting to use drawdown last year, up from 64% in 2009. Drawdown allows borrowers to access smaller sums of money secured against their property as and when they need it rather than taking one lump sum in a lifetime mortgage.
The average sum released consequently reduced to £43,519 in 2010 from £48,212 in 2009.
Lifetime mortgages saw their share of the market drop over the year from 33% of plans sold to 23% while home reversion sales remained at 3% year on year.
Home and garden improvements and holidays were the most popular reasons for releasing equity last year with 59% and 34% giving these reasons respectively.
Repaying debt and helping the family with their finances also ranked highly with 23% of equity release borrowers saying this was their motivation.
Dean Mirfin, group director at Key Retirement Solutions, said: “Customers are benefiting from the flexibility and favourable terms offered by drawdown and overall the equity release market was able to end three years of decline last year in the number of plans sold.
“The true barometer for the industry clearly rests with the number of plans sold rather than total amount released. The products available to consumers today naturally make equity release a more attractive option through the overall flexibility available and greater control over the cost of borrowing.
“Drawdown is now realising its potential in the equity release sector and still remains as one of the greater product innovations that the market has seen.
“Innovation by providers including the launch of products offering enhanced terms for customers with medical or lifestyle conditions plus increasing use of drawdown all adds to more competition among providers which points to further potential growth in 2011.”
Across the country seven out of 12 regions saw growth in the total number of plans sold.
The worst decline was in Wales which suffered a 23% drop while Scotland recorded the highest increase with a rise of 27% in total plans sold, closely followed by the North with an increase of 23%.
Only the North and Scotland saw increases in the total value of equity released.
