UK households made £23.3bn worth of mortgage overpayments in 2022, a figure equivalent to £64m per day, figures published by the Equity Release Council have shown.

The Council suggested that the spike in mortgage rates that followed September’s mini-Budget prompted those able to do so to make lump sum payments and reduce their loan sizes to limit interest rate costs.

In advance of its Spring 2023 Market Report, the Equity Release Council, the representative body for the equity release sector, has analysed data that shows a surge in lump sum capital repayments between October and December last year.

In Q4 2022 alone, £6.7bn of overpayments were made which is the highest quarterly figure on record, and a significant rise of 14% on Q3, when overpayments totalled £5.9bn. Having exceeded £5bn for the first time in Q4 2020, quarterly overpayments have now passed this milestone for nine successive quarters, and surged past £6bn for the first time ever in Q4 2022.

Despite this jump in overpayments, the Council’s analysis also revealed that total mortgage debt reached a new high of £1.6trn in December 2022, prompting fears that many older people might carry mortgage debt and therefore overpayments into retirement. As a result, the UK’s regular mortgage payments passed £15bn per quarter for the first time in Q4 last year, up from £14.3bn in Q3.

“Growing mortgage debt means more people will be making repayments into their retirement, when most would prefer to be mortgage-free,” said Equity Release Council CEO, Jim Boyd.

“This comes at a time when the cost of living crisis has added almost 20% to the ‘minimum’ cost of retirement, with many pensioners’ average income leaving them short of a moderate or even minimum level of comfort.

“In this environment, access to a range of later life lending products and comprehensive advice is more important than ever to help people fund their desired lifestyle in retirement. We are approaching the next wave of residential interest-only mortgages reaching maturity within the next five years, when many people will face a choice between borrowing for longer or selling up.

“As an industry, we need to be braced to support these homeowners to have the best retirement they possibly can, which for some will mean using flexible lifetime mortgages to remain in their homes.”

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