Over half (56%) of new customers who have made use of equity release products opted for drawdown lifetime mortgages, the Equity Release Council has found.

In its Q1 2024 equity release market statistics, the Council revealed that this figure was the highest quarterly share since the Bank of England began to increase the base rate from 0.1% in Q4 2021.

The Council found that between January and March 2024, 14,216 new and returning customers made use of equity release products. This is a 4% increase from Q4 2023.

New customer numbers dropped by 11% quarter-on-quarter in Q1 2023 and fell by nearly a third (31%) year-on-year.

The Equity Release Council said that with an interest rate cut expected ahead of the summer, potential new customers are adopting a "wait and see attitude", unless they have a pressing need for the funds.

Chair at the Equity Release Council, David Burrowes, said: "The Q1 2024 data highlights the ongoing challenges facing the residential property market in the UK as the nation waits to see what happens next with interest rates and the health of the economy.

"In our market, consumer confidence is holding up well among people with existing plans, who are not shy of making use of drawdown facilities or exploring further advances. New customer numbers are lower than last year with feedback from the market suggesting that older homeowners are adopting a more cautious approach to borrowing as there are hopes of interest rate reductions in the near future."

Returning customers drove a 6% quarterly increase in drawdown activity, as confidence held firm among those with existing plans.

However, drawdown lifetime mortgages recorded their highest share of new customer activity in Q1 for more than two years. While 45% of new customers opted for drawdown in Q2 2022, over half (56%) made this choice in Q1 2024.

Burrowes added: "The flexibilities offered by modern lending products are becoming increasingly popular as customers use them to manage their borrowing in a way that best meets their individual circumstances. New customers are choosing drawdown plans with smaller initial advances while existing customers are being more modest about their borrowing compared to the start of last year.

"As we look to the rest of 2024, we are confident that the green shoots that we are starting to see will germinate and the market will return to growth. Structural drivers of the later life lending sector are only due to intensify over the coming years and Council members are ready to support clients as they make sustainable long-term choices about their finances."

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