There was £5.58bn of new lending in 2022, and taking into account borrowing by existing customers through drawdown and further advances, total borrowing hit £6.3bn, according to equity release adviser Key Later Life Finance.
However, the market softened in the final quarter of last year as interest rates rose sharply and the number of products available shrank following the September mini Budget.
Average rates were 5.7 per cent at the end of 2022 compared with 3.07 per cent at the end of 2021.
This saw lending in the fourth quarter come in at £1.01bn, down from £1.08bn in the third quarter, despite the last three months traditionally being the strongest time of year.
Later life lending to repay debt
Key found around £3.3bn of property wealth across the year was used to repay debt as customers focused on strengthening finances amid rising interest rates.
Around half was used to pay existing mortgages while 38 per cent was used to rebroke existing equity release plans. The remaining 12 per cent were people paying off debt such as credit cards or loans.
The average amount released was £106,806, a sligt increase on the £104,792 average in 2021.
But there were strong regional differences with homeowners in London releasing a typical £231,694 while in Northern Ireland, the figure was £60,282.
Around 20 per cent of customers used some or all of their property wealth to gift money to relatives.
As holiday returned, the number of customers using some of their equity release to fund travel doubled to 14 per cent from seven per cent in the previous year.
Key: ‘Mini Budget created a different landscape’
Will Hale, chief executive at Key (pictured), said: “While hitting a record £5.58 billion worth of new equity release is a sign of a vibrant market with strong underlying customer demand and a competitive product landscape, there is no denying that the mini Budget created a different landscape in Q4 and one that has prevailed into the new year.
“Higher interest rates, lower LTVs and fewer products available, has meant that advisers have understandably adopted a prudent approach when helping customers consider their options.
“Balancing both short-term needs and long-term implications, customers and their advisers are sometimes delaying the decision to take equity from the home or taking out less as a lump sum in the knowledge that drawdown facilities and further advances may be accessed in the future as and when required.”
