Rising interest rates deterred many borrowers from releasing property wealth during 2023, according to the Equity Release Council (ERC).
The trade body said that total annual lending was £2.6bn in 2023 following a record-breaking £6.2bn in 2022.
This 58 per cent fall in lending takes lending volumes in the sector back to levels last seen in 2016/7.
Last year saw 64,448 active customers taking out new plans, making use of drawdown reserves or agreeing extensions to existing plans, which was down 31 per cent year-on-year.
Equity release borrowers were ‘cautious in the face of higher interest rates’ said the ERC.
End of year dip
There were 13,651 equity release customers in the last quarter of the year, down from 17,078 in quarter three of 2023 and from 20,597 in the last quarter of 2022.
The average amount borrowed by new customers in the last three months of the year was £79,484, compared to £106,917 a year earlier.
David Burrowes, chair of the Equity Release Council, 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.
“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.”