The total value of outstanding equity release loans to older home-owners (lifetime mortgages) reached £3.3 billion, representing nearly 71,500 mortgages, by the end of June, according to half-yearly data released today by the Council of Mortgage Lenders.

During the first six months of 2004, around 11,200 equity release loans were made, with a total value of around £517 million (compared to 13,240 loans, worth £597 million, in the second half of 2003). However, the value of lending remains above the first half of last year (11,870 loans, worth £504 billion).

The CML said the slowdown in the last six months is unlikely to be significant, and is at least partially a reflection of caution in advance of the new regulatory regime for lifetime mortgages that takes effect from the end of October.

Although lifetime mortgage lending is dwarfed by the £800 billion size of the total mortgage market, CML nevertheless expect the market for lifetime mortgages to continue to grow - albeit with a possible hiatus caused by the transition to the new regulatory regime, as lenders and intermediaries become used to the new conduct of business rules on equity release.

It may also be that some older home-owners are choosing to trade down to a smaller property to release equity rather than borrowing, although there is no clear data on this.

CML Director General Michael Coogan commented: "All the indications are that lenders and intermediaries are taking a cautious and responsible approach to opening up the equity release market, which is good news from a consumer protection perspective."

"Although consumers should think about all their options before deciding on a lifetime mortgage, these types of loans are extremely valuable for particular types of borrowers who are asset-rich but cash-poor, do not wish to move and understand the financial implications."

From October 31 2004, lifetime mortgage will be regulated by the Financial Services Authority (FSA). The FSA has identified lifetime mortgages as having a higher risk than mainstream mortgages and has introduced additional requirements for lenders offering them.