A total £1.6bn in property wealth was unlocked via equity release in the second quarter, a new report published by the Equity Release Council has shown.

This comes as over-55s took out 12,485 new equity release plans between April and June, a figure equivalent to 205 new plans agreed each working day.

In total, 23,910 new and returning customers withdrew wealth from their properties during Q2, a figure up by 515 (2%) from 23,395 on Q1 2022, and by 3,558 (17%) from 20,352 on Q2 2021.

The total amount of property wealth withdrawn by customers, which reached £1.60bn in Q2 2022, surpassed the previous high of £1.53bn from Q1 and has resulted in a total of £3.13bn for H1 2022. With average loan sizes broadly stable over the last year, the Equity Release Council said the increase in lending activity has been driven by more customers in the market and a shift in product preferences towards taking lump sums rather than setting up drawdown arrangements.

The Council also highlighted that the launch of its fifth product standard on 28 March means all new plans in Q2 came with the option for customers to make penalty-free partial repayments when they can afford to – allowing them to reduce their future interest costs with no requirement to make ongoing repayments.

Chair of the Equity Release Council, David Burrowes, commented: “The fact that hundreds of homeowners are now choosing to release equity each day, based on detailed financial and legal advice, is significant progress from the days when the market was considered an under-developed niche rather than the mainstream option it has become.

“Raising awareness of how modern equity release products work alongside other financial solutions is essential so people who are asset-rich but cash-poor can benefit from the wealth they have built up over their lifetimes and also support those around them.

“By making penalty-free partial loan repayments last year, customers reduced their future interest costs by tens of millions of pounds. The flexibility to make voluntary repayments, with no risk of repossession if they can’t afford to, is likely to be important to a growing number of people as they look to balance their books.”

The Council’s report highlighted a shift in product preference across the market in Q2, with lump sum lifetime mortgages leapfrogging drawdown products to become the most popular product choice.

These products accounted for 54% of new plans agreed between April and June, compared with 46% in Q1 2022 and 45% in Q2 2021. This was also the first time since Q1 2009 – the last time the Bank of England base rate was above 0.5% – that more new customers have opted for lump sums rather than drawdown products.

CEO of the UK’s largest equity release advice firm Key, Will Hale, said: “At a time when the UK is facing a cost of living crisis unlike anything we have seen for many years, the fact that older homeowners can use what is often their most valuable asset to help them manage their finances in later life should be celebrated.

“The modern later life lending market is well-regulated and progressive offering a wide range of products with flexible features and valuable customer protections.

“Looking to the future as the later life lending market grows, we need to continue to put customer needs at the heart of the development of products and advice propositions and consider how we raise awareness of all the options available to an ever-more diverse customer base.”

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