The Equity Release Council has reported "cautious optimism" after it saw an increase in the level of equity release activity at the end of Q2 2023.
Equity release figures for April to June this year, published by the council, showed that the number of active customers rose slightly to 17,028.
This represented an increase of 2 per cent on the previous quarter but a year-on-year decrease of 29 per cent.
The statistics, which were complied from member activity, including all national providers in the equity release market, also detailed that total lending was down 5 per cent from the previous quarter, falling to £664mn.
This means that it was the quietest since Q3 2016, where it reached £571mn, for lending.
More2life managing director, Ben Waugh, said: "While total lending fell slightly to £664mn in Q2, the market has certainly settled into a more optimistic position than it was in at the start of the year."
He added: "Rising interest rates contributed to a foreseeable drop in new plans, but encouragingly the ERC data suggests new customer levels began to pick up towards the end of the quarter, rising to 2,462 in June - a 23 per cent increase from April."
The data reported that at £59,294, the average first instalment from a new drawdown plan was 35 per cent lower than a year ago and the smallest since Q1 2017.
Also, while April was the quietest month of Q2, monthly activity in June reached its highest point of the year to date.
Standard Life Home Finance sales director, Kay Westgarth said that the high level of activity in June "bodes well" for the remainder of 2023 as the number of products on the market are starting to rise, and with pressures on LTVs easing, "we will be able to support more customers".
Equity Release Council chair, David Burrowes, said: "Higher interest rates have inevitably had a significant impact on the demand for lifetime mortgages like other mortgages, but the gap between residential and lifetime mortgage rates has narrowed over the last year.
"Equity release remains competitive and has lost none of the extra protections that have been added in recent years."
Burrowes added that innovations in equity release can "come into their own" in a higher rate environment, with drawdowns allowing customers to take what they need in the short-term and make extra withdrawals in future if their circumstances change and interest rates fall.
"The socio-economic factors for releasing equity remain," he added, "people are living longer, they are not saving enough for retirement and they want to help themselves and their loved ones to live more comfortable lives."
Additionally, Key CEO, Will Hale, stated: "The market is down as we continue to manage the challenges created by a high inflation rate environment and the mini Budget at the end of last year.
