Equity release market ‘maintains holding pattern’ in Q1

The first quarter of 2024 has seen a steady interest in equity release products, according to the latest figures from the Equity Release Council.

In the period from January to March, there was a 4% increase in the total number of new and returning customers, totalling 14,216, despite a slight decrease in overall lending.

David Burrowes, chair of the Equity Release Council, noted the persistence of consumer confidence, particularly among existing plan holders. “The Q1 2024 data highlights the ongoing challenges facing the residential property market in the UK as the nation waits to see what happens next with interest rates and the health of the economy,” he said.

Burrowes added: “In our market, consumer confidence is holding up well among people with existing plans, who are not shy of making use of drawdown facilities or exploring further advances. New customer numbers are lower than last year with feedback from the market suggesting that older homeowners are adopting a more cautious approach to borrowing as there are hopes of interest rate reductions in the near future.”

The data indicates a shift towards drawdown lifetime mortgages, with 56% of new customers opting for this type of plan, marking the highest quarterly share since the Bank of England started raising rates from 0.1% in the last quarter of 2021. The preference for drawdown products is evident as customers look to manage their borrowing amidst uncertain economic forecasts.

Total lending for Q1 stood at £504m, a 6% decrease from the previous quarter, influenced by the lower number of new customers and a growing preference for drawdown products, allowing customers to reserve a significant portion of their loans for future use.

Among returning customers, there was a 6% increase in drawdown activity, with 7,753 taking instalments from their reserved facility. The average withdrawal amount among these customers rose to £12,822, up 9% from the last quarter of 2023.

“With the long-term growth of property prices, existing customers remain confident in seeking extensions on their plans, helped by the careful loan-to-value limits set by providers,” Burrowes explained.


Lorna Shah, managing director, Legal & General Retail Retirement:

“The latest statistics paint a clear picture of the current later life lending market. While market conditions have made some new customers more cautious of borrowing, existing customers have confidently made use of their drawdown facilities. 

“Our own Legal & General Home Finance data shows that more of our customers made use of their additional drawdown facility in Q1 2024 than in the last quarter of 2023 and home improvements remain the most popular use of lifetime mortgage funds.

“We expect that equity release will be considered as more of a mainstream product in the future, alongside pensions, as customers look for more holistic options to fund their retirement goals. After all, property wealth remains a significant financial asset for many homeowners. As a lender, we always want to support customers and recognise their individual circumstances, which is why we’re always looking to innovate and listen to adviser feedback, to ensure the best outcomes for everyone.”