The number of equity release customers in Q1 2023 dropped 19% from the previous quarter and 29% year-on-year, according to the Equity Release Council.

During the January to March period of 2023, 16,691 individuals opted for equity release. Total lending in Q1 2023 amounted to £699m, representing the quietest quarter in equity release since Q2 2020.

New plans agreed saw a sharp decline of 39% compared to Q4 2022 and a 44% decrease compared to Q1 2022.

Customers responded to the higher interest rate environment by borrowing less, with the average initial withdrawal from a new drawdown plan dropping 34% year-on-year to £61,785 – the lowest amount seen since Q2 2017.

Nearly half of new customers opted for drawdown lifetime mortgages, while the remaining 49% chose a single, larger lump sum option.

David Burrowes, chair of the Equity Release Council, commented: “People have had to adjust to the realities of a higher interest-rate environment in many aspects of their personal finances. These figures show the equity release market has been no exception.”

Kay Westgarth, director of sales at Standard Life Home Finance, said the figures highlight a challenging period for the later life lending market.

“Having seen record figures in 2022, the September mini-budget saw rates increase, LTVs fall and some customers adopt a ‘wait and see’ attitude to accessing housing wealth,” Westgarth commented.

“This impact is clearly seen in Q1 2023 but we do believe that, given the strong underlying customer demand and innovation seen across the market, subsequent quarters will see stronger lending volumes.”