Last year, 26,119 customers took out new equity release plans, with drawdown plans restored as the majority preference.

Across 2023, there was total lending of £2.6bn, returning the market to the level of activity last seen between 2016 to 2017 (£2.1bn to £3.1bn). This is according to  newly-published full year market statistics from the Equity Release Council (ERC).

New and returning equity release customers in Q4 totalled 13,651, down from 17,078 in Q3 2023 and 20,597 in Q4 2022. The average amount borrowed by new customers in Q4 2023 was £79,484, compared to £106,917 a year prior.

Commenting on the figures ERC chair David Burrowes said: “Every corner of the mortgage market saw rising interest rates put the brakes on activity in 2023, and equity release was no exception with customers and their advisers taking a cautious approach. This resulted in loan sizes shrinking and fewer people borrowing for more aspirational reasons.

“While we’ve grown accustomed to stronger demand in recent years, we shouldn’t lose sight of how far the market has matured since activity was last at these levels. New product features and customer protections mean we are well positioned to serve the inevitable demand that will come as confidence returns”.

He added: “It’s clear some people are holding out for future rate cuts, but with no timeline as to when this may happen or how sustained this will be, older homeowners will need to continue to consider what is right for their individual circumstances. Many people are relying on their property wealth to retire in comfort, and we are focused on ensuring they can access it confidently and securely.

Responding to ERC’s data Legal & General Home Finance chief executive Craig Brown said: “Last year was challenging for homeowners for many reasons, resulting in a significant downturn in the equity release market, but I’m proud the later-life lending industry has shown resilience and pushed forward with innovation. As we look ahead, we anticipate 2024 will bring a renewed interest in lifetime mortgages and see more customers reconsider using property wealth for their financial needs.

He added: “Customers have been cautious, but there are signs that the market is stabilising. House prices are still significantly higher than pre-pandemic figures (18% up from the end of 2019), so property still represents an important asset for homeowners to consider as part of their long term financial planning.