New research reveals 16% less people are using equity release for mortgage repayments in first half 2023 compared to first half 2022.

The latest data from Mortgage Advice Bureau’s Later Life’s Market Monitor Report H1 2023 shows the number of people using equity release funds to repay their mortgages has fallen by 16%, reducing from 40% (H1 2022) to 24% (H1 2023).

According to Mortgage Advice Bureau this is due to lenders restricting LTVs to reflect housing market conditions, leaving some customers unable to access the financing they need.

Remortgaging of existing equity release products has also fallen by 5%, dropping from 19% (H1 2022) to 14% in H1 2023.

Once again, the lower LTVs available and higher interest rates may have discouraged some customers from refinancing their existing equity release plans.

The research suggests that the key priorities for equity release customers in H1 2023 lie in supporting their families (20%) and improving their homes to make them more appropriate for older age (45%).

Indeed, the proportion of equity release used for gifting has witnessed a remarkable increase, rising from 12% in H1 2022 to 16%.

Notably, the proportion of people using equity release to repay unsecured debt has fallen to one in ten. Just 5% of the proceeds are used for this purpose – a 4% drop from the previous year’s 9%.

One noteworthy aspect of equity release usage is its role in financing home improvements. While 45% of equity release plans are partially or fully used for home improvements, the actual expenditure on such projects accounts for a smaller portion, amounting to 12%, or £131m.

Average amount released for home improvements: In H1 2023, the average amount released for home or garden renovations was £14,082, reflecting a decline from H1 2022 (£17,978) and H1 2021 (£16,907) due to lower LTVs, higher interest rates, and cautious borrowing attitudes.

Mortgage Advice Bureau proposition director Steve Humphries comments: “Like other segments of the residential property market, the later life lending market faced challenges at the beginning of the year. Nevertheless, all signs point to a stronger second half of the year compared to the first.

He adds: “As confidence gradually improves and people realise that any potential house price corrections aren’t as severe as initially predicted, customers will begin to reconsider their options for later life lending, and how they choose to use equity release”.