Annual growth in equity release lending has reached the highest level seen for over a decade.

That was according to the autumn 2016 Equity Release Market Report from the Equity Release Council.

There was a growth of £198 million in equity release lending between the first halves of 2015 and 2016, the report stated.

Lending in the second quarter of 2016 exceeded £500m for the first time and set a new record for the highest quarterly lending total.

Overall, the first half of 2016 saw £908m of lending from members of the council: £198m or 28% higher than the equivalent period of 2015.

In value terms, this £198m growth was the highest seen in the last decade, surpassing £160m in H1 2014, the council said.

The rise has come at a time when more providers and products have appeared on the market. Research by Moneyfacts in March showed the range of equity release products has grown by 34% year-on-year and more than doubled compared with three years ago.

The council’s analysis shows that since 2007, equity release lending activity in the second half of each year has been 13% higher on average than the first half of the year. This has increased to 20% over the last five years (2011-2015) and reached 26% in 2015.

Nigel Waterson, chairman of The Equity Release Council, said: “Growth is being driven by a combination of rising consumer demand and continuing signs of innovation and change in the market.

“In terms of demand, savings shortfalls and other financial challenges leave many over-55s looking for an extra source of income in later life, while housing wealth also offers a vehicle for intergenerational transfer of wealth and inheritance planning.

“The industry response so far this year has already seen new providers, partnerships and new potential emerge, with closer relationships being built with related areas of financial services including residential mortgages and later life Financial Planning.

“Established and new providers are making strides to compete on interest rates, expand the product range and introduce new flexibilities alongside the Standards and guarantees that have established a safe and reliable market for consumers over the last 25 years.”

Growth of 13% from H1 to H2 this year would result in annual lending reaching £1.93bn for 2016, officials said.

A 20% rise from H1 to H2 would see annual lending reach £2bn, while 26% growth from H1 to H2 would result in 2016 lending of £2.05bn.

Drawdown lifetime mortgages remained the most popular product choice in H1 2016, with 67% of new plans falling into this category.

This continued the trend seen over the last five years where at least 65% of new plans agreed during every half year period since H1 2011 have been drawdown.

A total of 7,917 drawdown plans were agreed: the largest number in any first-half period on record.