The number of new lifetime mortgages increased in 2006 but the value of new lending fell, according to the Council of Mortgage Lenders.
It says this reflects a drop in the size of the average new loan from around £45,000 in 2005 to £41,000 in 2006.
By the fourth quarter, the average new loan was only £38,400 – the lowest since the CML began its survey in 2002.
New lifetime mortgage lending totalled £971m in 2006, compared with £1.05bn during the previous year. But the number of new loans rose from 23,215 in 2005 to 23,786 last year.
The figures come after Safe Home Income Plans reported earlier this week that its members saw a marginal 3 per cent increase in lifetime mortgage business last year.
CML head of policy Jackie Bennett says: “The trend towards smaller loan amounts on lifetime mortgages suggests that lenders and intermediaries are being careful to ensure that people are only borrowing what they need. The move towards greater use of flexible features that allow people to draw down money as they need it, rather than all upfront, will also have helped the trend.”