Customer confidence in the equity release market is starting to improve after the average amount of accessed property wealth registered an increase, new analysis by Key Later Life Finance has shown.

With available loan-to-values rising, the average amount released by customers increased by 2% to £83,340 in Q2.

Key suggested that while the full impact of the UK’s economic uncertainty was felt in Q1 this year, after the equity release market suffered a hungover from last year’s mini-Budget and amid ongoing interest rate rises, the market had started to turn a corner in Q2 with decline slowing.

Latest figures showed that the number of plans taken out fell just 11% to 6,219 compared to the first three months of the year, while the total value of new releases was only 9% lower at £518m.

However, compared to the first half of 2022 – which was the midpoint in a record-breaking year for the market – total plan sales in the first half of this year were 48% lower, at 13,194, and the total value of new releases dropped 57% to £1.09bn.

With the average standard variable rate on a residential mortgage reaching 7.52% at the end of Q2, but the average rate on an equity release plan hitting 6.3%, Key suggested that many older borrowers looked to use these products as well as the features the boast to manage their essential borrowing.

Key’s data shows that in H1, 32% of the money released was used to repay mortgages, 14% spent on re-broking existing equity release plans and 5% used to pay off unsecured borrowing. One in five customers used property wealth to help family while 45% used some or all the proceeds on home renovations, with a particular focus on investments in essential or money saving repairs on their property.

Key CEO, Will Hale, said: “As with all other residential property markets, the later life lending market has had a tough start to the year, but all the indicators suggest that the second half of the year should be stronger than the first half. Indeed, we’ve started to see some green shoots with the average amount released increasing slightly and more spending on gifting, home improvements and other discretionary expenses in Q2.

“As customer confidence starts to improve and lenders step up to the challenge of meeting their demands, we do expect overall borrowing to increase and more people to benefit from accessing their housing equity.

“This could arguably not come at a better time as even with the bumper state pension increases and the Government’s mortgage support measures, the cost of living crisis continues to be felt.”

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