Annual lending in the equity release market totalled £2.6bn in 2023, a level significantly down on the record breaking £6.2bn in 2022.

According to new figures published by the Equity Release Council, last year’s total returned the market to the level of activity last seen between 2016 and 2017, when the figures reached £2.1bn and £3.1bn, respectively.

The Equity Release Council’s latest figures covered Q4 as well as 2023 as a whole, and revealed that new and returning equity release customers totalled 13,651 in Q4, down from 17,078 in Q3 2023 and 20,597 in Q4 2022.

In total, last year saw 64,448 active customers taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans, a figure that was down 31% year-on-year.

The average amount borrowed by each new customer in Q4 was £79,484, a figure down significantly compared to £106,917 a year earlier.

“While we’ve grown accustomed to stronger demand in recent years, we shouldn't lose sight of how far the market has matured since activity was last at these levels,” said chair of the Equity Release Council, David Burrowes.

“New product features and customer protections mean we are well positioned to serve the inevitable demand that will come as confidence returns. Council standards represent the pinnacle of protection for older consumers, which makes it crucial for them to seek out a member firm when exploring their options.

“It’s clear some people are holding out for future rate cuts, but with no timeline as to when this may happen or how sustained this will be, older homeowners will need to continue to consider what is right for their individual circumstances.”

Reacting to the Council’s latest figures, group communications director at Just Group, Stephen Lowe, added: “Today’s figures show what a tough year the equity release market has endured, particularly after the strong COVID-rebound in 2022 that broke all records. While existing borrowers were protected by fixed rates, the continued ratcheting up of the Bank of England interest rate to 5.25% in August was always going to make people cautious about new borrowing.

“Looking forward we have grounds for optimism as the dust settles. Expectations are that the bank rate has close to peaked and lifetime mortgage rates have been falling in recent months. It may take a while for that to show up in lending figures as people remain cautious and wait for the right moment.”

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