Homeowners completed record overpayments in 2022

Households made an unprecedented £23.3 billion of mortgage overpayments last year, or £64 million per day, as mortgage rates spiked in the wake of the mini-budget new data from the Equity Release Council has revealed.

The September fiscal statement prompted those able to do so to make lump sum payments and reduce their loan sizes to limit interest rate costs says the body in its Spring 2023 Market Report.  

In the final quarter of last year, £6.7 billion of overpayments were made, the highest quarterly figure on record, and 14% higher than the third quarter.  

Throughout 2022, the average two-year fixed-rate home loan leaped from 2.38% to 6.01% between January and December, while the average five-year fix rose from 2.66% to 5.80%.  

Despite this jump in overpayments, total mortgage debt also hit a new high of £1.6 trillion in December, prompting fears that many older people might carry mortgage debt and burdensome overpayments into retirement. The nation’s regular mortgage payments passed £15 billion per quarter for the first time in the final three months of last year, up from £14.3 billion in the third quarter.  

Equity Release Council Chief Executive Jim Boyd said “Growing mortgage debt means more people will be making repayments into their retirement, when most would prefer to be mortgage-free. This comes at a time when the cost-of-living crisis has added almost 20% to the ‘minimum’ cost of retirement, with many pensioners’ average income leaving them short of a moderate or even minimum level of comfort.  ”

“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.”