The number of voluntary partial repayments made by equity release customers rose by almost 50% in 2022 compared to the year before, the Equity Release Council (ERC) reports.

Figures from the trade body revealed 90,000 people took advantage of the penalty-free repayments in 2022, reducing their loans by a combined £102m and cutting their future interest costs by £116m.

During the year, 190,374 partial repayments were made – which is 48% more than the previous year.

The ability to make voluntary penalty-free part repayments was made a compulsory feature for all products that meet Equity Release Council standards from March last year.

It enables customers to reduce their interest costs and preserve more of their property wealth to pass on in inheritance.

The council’s Spring 2023 Market Report showed equity release activity reached record levels in the second half of 2022, despite the fallout from the mini-Budget.

Product pricing has fallen gradually since then to an average of 6.23% at the start of April this year, with some advertised rates as low as 5.52%.

There are almost 200 products, but average maximum loans-to-value have been tightened from 47% last August to 38.7%, the report found.

Homeowners are using equity release to boost their incomes in later life by drawing on property wealth, the ERC says. This is helping them afford a ‘moderate lifestyle’ for 12 years, or five years of ‘living in comfort’.

ERC chair David Burrowes comments: “People can choose whether they want to make repayments without fear of losing their homes, and since this feature was embedded into ERC standards, we have seen people’s usage grow and their interest savings add up.

“By making modest repayments when they can afford to, customers can benefit from their property wealth in the here-and-now while reducing their overall borrowing costs by tens of thousands of pounds.

“A nation where so many pensioners struggle to afford a moderate standard of living simply cannot ignore the potential for property to help bridge the gap. Equity release could make a decade of difference or more to someone whose pension income might otherwise only cover a basic lifestyle.”

Responding to the report, Canada Life says the data reiterates the ‘crucial role that equity release plays in the personal finances of so many’.

Canada Life head of marketing communications Alice Watson says: “Due to a combination of limited pension adequacy and the ongoing cost of living crisis, the need for financial advice has never been greater as customers search for flexibility in the midst of uncertainty.

Knight Frank Finance head of later life finance team David Forsdyke adds: “The latest report from the Equity Release Council shows just how far products have evolved in recent years. They are more flexible than ever and are helping older homeowners in an ever-widening range of applications. This demonstrates how property wealth is becoming a really important financial planning tool.

“As an industry we must continue to look ahead and innovate to meet the needs of an ageing population under pressure and highlight the role that property wealth can play as part of a holistic retirement plan.”

It follows news last week that UK households overall made an ‘unprecedented’ £23.3bn in mortgage overpayments last year with the mini-Budget and rising mortgage rates prompting those who could to make lump sum repayments and reduce their loan sizes.