Figures from the Equity Release Council (ERC) ahead of its spring market report showed that the total overpaid was higher than the £5.9bn value recorded in Q3, and the first time quarterly overpayments exceeded £6bn since 1999. 

The ERC said this was likely due to borrowers trying to reduce their loan sizes in order to lessen their “interest rate burden” as mortgage pricing surged. 

The trade body said it noted a surge in lump sum capital repayments between October and December. 

Over the entire year, borrowers made overpayments worth £23.3bn. 

According to the ERC, quarterly overpayments passed £5bn for the first time in Q4 2020 and the value has steadily increased for nine successive quarters. 

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Rise in mortgage debt and property wealth 

Despite the rise in overpayments, the total mortgage debt held by UK borrowers reached a high of £1.6trn in 2022. This caused regular mortgage payments to pass £15bn per quarter for the first time in Q4, up from £14.3bn in Q3. 

The total value of private property in the UK stood at £7.3trn in 2022, a 7% rise on 2021. Net property wealth reached £5.6trn at the same time, an 8% increase which equates to £228,300 per household. 

These increases have been impacted by falling house prices, the ERC noted. 

Jim Boyd, CEO at the Equity Release Council, said: “Growing mortgage debt means more people will be making repayments into their retirement, when most would prefer to be mortgage-free.  

“In this environment, access to a range of later life lending products and comprehensive advice is more important than ever to help people fund their desired lifestyle in retirement. We are approaching the next wave of residential interest-only mortgages reaching maturity within the next five years, when many people will face a choice between borrowing for longer or selling up.

“As an industry, we need to be braced to support these homeowners to have the best retirement they possibly can, which for some will mean using flexible lifetime mortgages to remain in their homes.” 

Boyd added: “Equity release is not a silver bullet solution, but it should always be part of these important discussions. For the right person, at the right time, it has the potential to be a positive and life-changing decision.”