UK mortgage holders are repaying record amounts of mortgage debt in the higher interest rate environment, according to the Equity Release Council’s Autumn 2023
Market Report.

However, the report also estimates that high levels of debt and a lack of pension savings make it increasingly likely that homeowners will need to borrow more money against the value of their properties in later life to make ends meet.

The Council report explores the impact of higher interest rates on the lifetime mortgage and wider mortgage market during the first half of 2023. It shows regular and one-off capital repayments across the mortgage market have totalled more than £21bn per quarter since Q4 2022, according to official data, up from £17bn before the pandemic.

Total UK mortgage debt remained stubbornly high at £1.63tn in mid-2023. Despite this, the average home contains equity of £222,526: significantly more than the average pension. All of this equity sitting in the UK residential property market means that the total value of UK property is £7.20trn, down from a record £7.37trn a year ago. This means that UK homeowners have amassed £5.57trn in equity, which the report says a vital resource when nearly 3m people will reach state pension age this decade without the savings to afford a moderate standard of living in retirement.

Lifetime mortgage customers show signs of caution
Among older homeowners already using lifetime mortgages to release equity from their homes, the Council’s data shows a shift in borrowing patterns during H1 2023.