The trade body adds that the sector attracted 4,698 new customers between January and March, 11% lower than the final quarter of last year and 31% lower than a year ago.  

Overall, 14,216 new and returning customers made use of equity release products in the period, up 4% on the prior three months.  

Of this number, 55% were drawdown customers taking withdrawals from existing plans. It adds that 33% took out new plans, while the remaining 12% agreed further advances, or extensions, on existing plans.  

Among new borrowers, drawdown lifetime mortgages recorded their highest share of new customer activity in the period for more than two years. While 45% of new customers opted for drawdown in the second quarter of 2022, 56% made that choice in the first quarter of this year.  

The report adds that new drawdown customers typically agreed larger loans than lump sum customers, averaging £114,911 compared to £103,492 in the first three months of the year.   

“However, with only £59,660 taken upfront, flexible product design makes it possible to benefit from future rate cuts by holding the remainder back for future needs, with each withdrawal charged at the prevailing rate at the time,” the survey says.  

New drawdown customers are taking just 52% of their loans upfront with the rest held in reserve. This compares to a 66% average being taken upfront between 2017 and 2022.  

The home loans sector is operating in an environment that has seen the Bank of England lift the interest rate 14 times from 0.1% December 2021 to hit 5.25% last August.    

Equity Release Council chair David Burrowes says: “The first quarter 2024 data highlights the ongoing challenges facing the residential property market in the UK as the nation waits to see what happens next with interest rates and the 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. 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.”  

Legal & General Retail Retirement managing director Lorna Shah points out: “While market conditions have made some new customers more cautious of borrowing, existing customers have confidently made use of their drawdown facilities.  

“We expect that equity release will be considered as more of a mainstream product in the future, alongside pensions, as customers look for more holistic options to fund their retirement goals.”