Over half (54%) of the equity released in properties in Q1 2023 was used for debt management, the latest data from the Mortgage Advice Bureau has found.

The Mortgage Advice Bureau Later Life’s Market Monitor Report Q1 2023 found that of this 54% in allocated funds, 34% was used for mortgage repayment, 15% for a lifetime mortgage and 6% on unsecured borrowing.

Despite the proportion of equity release used to repay a mortgage being up 2% compared to Q1 2022, the amount being used for remortgaging decreased to 15%, falling from 22% in the same quarter in 2022, and unsecured borrowing decreasing to 6%, compared to 11% in Q1 2022.

The findings can be attributed to the changing landscape of the equity release market following the mini-Budget in September 2022, which led to higher rates, reduced loan-to-value ratios and limited product choice due to recent regulatory changes.

The report also found that although there was a decline in the number of customers releasing equity for specific purposes compared to Q1 2022, the number of people using released equity for home improvements rose by 6% to 45% in Q1 2023.

Although this only accounts for around 11% of the equity released in the first quarter, it was found that the amount used for essential maintenance, such as rewiring and central heating upgrades, increased, while demand for new kitchens and conservatories had declined.

Furthermore, there was an increase in the amount of equity released to fund holidays, rising from 11% to 16% for Q1 in 2022 and 2023 respectively. However, this made up just 2% of the overall equity used in the first quarter.

Proposition director (later life & wealth), Mortgage Advice Bureau Later Life, Steve Humphries added: “The Q1 2023 statistics from the MAB Later Life Market Monitor provide an insight into the unprecedented level of change experienced by the equity release market, much of which can be attributed to the fallout from the September 2022 mini-Budget.

“As the market continues to settle, it’s crucial for us to understand and adapt to these shifts in customer behaviour regarding equity release usage. With this in mind, it’s encouraging to see that, despite these market changes, debt management remains the driving force for equity release – demonstrating how equity release continues to empower individuals to reach their financial goals with confidence and peace of mind.”

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