A total of 14,216 customers made use of equity release products between January and March of this year despite a decrease in new customers, the Equity Release Council has found.
This represents an increase of 4 per cent from the final quarter of 2023 in which 13,651 customers used equity release products.
Equity Release Council chair, David Burrowes said the Q1 data highlights the “ongoing challenges facing the residential property market” as the nation waits to see what happens next with interest rates and 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,” he added.
New and returning customers
The council also revealed that, while numbers increased overall, the number of new customers utilising equity release products was 11 per cent lower in Q1 2024 when compared with Q4 2023, reaching 4,698.
This also represented a decrease on a yearly basis at 31 per cent lower than in the first quarter of 2023.
Explaining this finding, Burrowes said: “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.”
However, despite fewer new customers, drawdown lifetime mortgages recorded their highest shares for more than two years.
Some 56 per cent of new customers opted for drawdown lifetime mortgages, the highest quarterly share since the Bank of England began to increase the base rate in Q4 2021.
Meanwhile, the data also provide insight into the council’s returning customers, finding the number taking instalments from their reserve facility reached 7,753 in Q1 2024
This represented an increase of 6 per cent on the final quarter of last year where it stood at 7,314.
Additionally, each returning drawdown customer took £12,822 on average, up by 9 per cent from £11,782 in Q4.
However, this was still lower on a yearly basis as returning customers took £13,345 in Q1 2023.
Looking ahead, Burrowes stated: “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.”
Additionally, Legal & General Retail Retirement managing director, Lorna Shah, stated: “We expect that equity release will be considered as more of a mainstream product in the future, alongside pensions.
“After all, property wealth remains a significant financial asset for many homeowners.
“As a lender, we always want to support customers and recognise their individual circumstances, which is why we’re always looking to innovate and listen to adviser feedback, to ensure the best outcomes for everyone.”
tom.dunstan@ft.com
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