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Retired UK homeowners released more than £2.1billion of equity from their properties last year as the market reached an all-time high.

Figures from over-55s finance specialists Key Retirement revealed the average customer accessed nearly £78,000 from their home to boost their standard of living.

The total value of property wealth released in 2016 was up by 26 per cent on the previous year at £2.154 billion.

In Scotland, homeowners accessed more than £86million in equity, with research finding two-thirds of customers used the cash to make home and garden improvements.

Around a third (31 per cent) are spending some of their property wealth on clearing loans or credit card debts, narrowly ahead of the 29 per cent who use the money to fund holidays, with 24 per cent using it to help out family.

Mortgage repayment, which is expected to become a big issue in 2017 and beyond due to the pressures on older homeowners of interest-only mortgage terms coming to an end, accounted for 22 per cent of use for funds released.

Equity release is available to those aged between 55 and 95, who own a property worth at least £60,000.

The amount of tax-free money released varies, depending on factors such as age and the value of the property.

Dean Mirfin, technical director at Key Retirement, says last year’s record figures point to the continued increasing use of equity release as a means of supplementing retirement incomes and helping to improve quality of life for the over 55s. He added: “The equity release market has broken through the £2billion barrier for the first time and has more than doubled in value in just five years, highlighting how property wealth is making a huge contribution to retirement planning.

“The average amount being released by retired homeowners at nearly £78,000 underlines that property wealth can help with a number of issues for customers, ranging from improving their homes and going on holiday to helping family and clearing debt.

“With more than one in five releasing equity from their homes to repay mortgages, and with 2017 being the start of the first major wave of interest-only mortgage maturities, we expect demand from those with a shortfall to repay the capital – or no means at all – to turn to equity release as a solution, which will further drive demand.

“Rate cuts across the market and the launch of new solutions demonstrates that the market is responding to the growing need for alternatives to traditional retirement income solutions, which are being squeezed by the historically low interest rates.”