Total equity release lending has increased by 15% to £578m in the second quarter of 2024, while new customers taking out new products made Q2 the busiest quarter for almost a year for the equity release market.

The Equity Release Council (ERC) has revealed that despite these quarterly increases, total lending and new customers dropped by 13% and 22% respectively annually.

Chair at the ERC, David Burrowes, said: "Following a period of economic uncertainty, we are starting to see consumer confidence gradually return to the market with increasing numbers of new customers choosing to use their housing equity to support their needs in later life.

"The pick-up in activity between the first and second quarters is a welcome reversal of the downward trend seen one year ago. There is a long way to go to unlock the market’s full potential, but there are reassuring signs in these figures that we are turning the corner and acclimatising to this unfamiliar interest-rate environment after years of rock-bottom rates."

In addition to these statistics, existing drawdown customers, who are allocated a cash reserve when they first take equity release, continued to make use of the facility, increasing by 3% quarterly.

The ERC added that increases in average loan sizes on both a quarterly and annual basis offer another sign of returned customer confidence. New drawdown customers are making larger initial withdrawals and reducing the amount held in reserve.

The average new lump sum that was withdrawn was £110,969, a quarterly and annual increase of 7% and 18% respectively.

Furthermore, the new initial drawdown totalled £65,453, increasing by 10% both quarter-on-quarter and year-on-year.

Burrowes added: “Almost 20 years on from their introduction, it’s notable that drawdown products are becoming the majority preference once again. Some of the new flexibilities embedded into the modern market such as fixed early repayment charges are equally designed for the long-term and set up so that customers can benefit from years to come.

"Adviser feedback suggests customers are continuing to find a variety of uses for their property wealth, with gifting and funding home improvements both key motives behind activity in Q2 along with boosting everyday income and closing pension shortfalls.

"However, refinancing an existing mortgage, including interest-only loans, continues to rank as the biggest driver of current market activity. The innovative design of modern lifetime mortgages means anyone taking this route will have lots of ways to smooth the transition, not least the freedom to make repayments when they can afford to without the risk of repossession looming over them."

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