The Equity Release Council’s (ERC’s) latest quarterly market report for Q1 2025 showed that the market had a strong start to the year with £665m worth of housing equity accessed by customers.
This marked a 32% increase in total lending when compared to Q1 2024 (£504m) and the fourth successive quarter of growth recorded by this market.
Market growth has been driven by a significant increase in new customers (14%) taking lump sums supported by improved product choice and positive annual house price growth (2.8%).
The number of plans taken out remained relatively static year on year (1%) and fell slightly quarter on quarter (5%) as the number of customers taking drawdowns (7%) and further advances (6%) reduced.
The average amount borrowed by the 47% of customers who chose a lump sum product was £127,414.
This is up 11% on the previous quarter and up 23% on the same time last year as homeowners chose to access their housing equity to repay mortgages, future proof their homes and improve their standard of living.
While product availability remained plentiful with over 1,200 plans for advisers to choose from, the average APR of new products launched in the first three months of the year was higher than those recorded in 2024 (7.15% versus 6.67% in Q1 2024, according to data from Advise Wise).
Gilt rates which govern the interest rates of equity release products have been steadily rising since January 2024 as investors look for guaranteed returns amid global economic uncertainty.
David Burrowes, chair of the Equity Release Council, said: “The Council’s market data shows that the equity release sector has seen its fourth consecutive quarter of growth in total lending and a 32% increase in the amount borrowed compared to the same time last year.
“Growth which has been driven by more new borrowers accessing greater amounts of housing equity to manage mortgage debt, boost income and help their wider families.
“Fewer existing customers accessed drawdown or requested further advances as older homeowners adopted a cautious approach to additional borrowing given the current world economic climate.
“Gilt rates which govern interest rates on lifetime mortgages have been steadily increasing since January 2024 which has impacted rates but lenders are working to mitigate this by encouraging the use of flexibilities such as the ability to make ongoing repayments.”
He added: “Q1 typically sets the agenda for the remainder of the year and the figures released today are a testament to the resilience of the market and its ability to adapt to consistently shifting economic conditions.
“With the FCA due to launch a public consultation into lending into later life in June, this sector is likely to be in the spotlight for much of 2025 and today’s figures highlight its growing momentum as lenders, advisers and lawyers work together to support customers.”
Reaction:
Scott Burman, head of distribution at Pure Retirement:
“The latest figures from the Equity Release Council continue to show an encouraging picture of progress within the later life lending sector, and a customer base who are increasingly prepared to take advantage of the ability to release equity in their homes at average rates comparable to residential mortgages to achieve their financial goals.
“Annual growth in borrowing amounts across all product types, and across both initial and further borrowing, demonstrates the way that lifetime mortgages are catering to a diverse audience – as also evidenced by our own findings, which found that in Q1 9% of business came from owners of properties valued at £850,000 and above.
“The intersection of product innovation and a customer-centric culture within the market continues to make lifetime mortgages an attractive solution for many, and we look forward to supporting the Council, our advisers, and our customers going forward in delivering best outcomes.”
Richard Pike, chief sales and marketing officer at Phoebus:
“The rise in equity release lending confirmed in the Equity Release Council’s Q1 2025 report paints a clear picture of a sector coming into its own to meet the needs of older homeowners. With £665m of equity accessed in Q1 of 2024, a 32% increase year-on-year, it’s a signal that housing wealth is becoming more of a mainstream solution in retirement planning.
“Four consecutive quarters of growth and a notable rise in average loan sizes suggest homeowners are increasingly turning to equity release to navigate financial challenges, repay mortgages, or fund lifestyle changes.
“With many older homeowners still navigating high living costs and interest-only mortgage maturities, tapping into property wealth is no longer a last resort – it’s becoming a strategic choice and intermediaries and IFAs should be giving this product full consideration when it comes to planning for later life requirements.”
Leon Diamond, founder and CEO at LiveMore:
“Today’s data shows that equity release lending has now grown for four quarters in a row, reaching £665m in Q1 2025.
“While total customer numbers have dipped slightly on last quarter, they remain ahead of Q1 2024, driven by a rise in new borrowers and larger loan sizes.
“But these figures only represent equity release – one piece of the full later life lending picture, which is also showing significant growth (data from UK Finance shows the value of later life lending was £5.6bn in Q4 2024, up 38.6% compared with the same quarter a year previously).
“Later life lending is a broader market than equity release, offering everything from Retirement Interest Only and standard interest-only to capital & interest repayment and term-based borrowing to meet the diverse and evolving needs of the 50+ market.
“At LiveMore, we offer a full range of later life mortgage products — including but not limited to equity release — so older borrowers can explore all their options with confidence and peace of mind.”
Lorna Shah, managing director, retail retirement at L&G:
“This data paints an encouraging picture of the later life lending market for the year so far. The rise in total lending, which has carried into a fourth consecutive quarter, suggests that equity release is becoming a more mainstream option for those looking to boost their retirement income by tapping into their property wealth.
“We know that many retirees are not able to maintain the lifestyle they want with their existing pension pots alone. Seeking financial advice can ensure those retirees can take a holistic view of all of the options available to them.”
Dave Harris, CEO at more2life:
“What’s most encouraging to me about these figures is that greater numbers of later life customers are being made aware of the full range of options to them, beyond the traditional mortgage. We have only scratched the surface of how big this market can, and should, be.
“Our own data has shown a growth in the number of advisers considering affordability when working with later life clients, which is resulting in borrowers benefiting from solutions that meet their personal needs and circumstances.
“Providers across the later life space have innovated, such as through the development of a suite of products that reward customers for making payments, and we are seeing that work bearing fruit.
“There remains more work to be done however in ensuring that all advisers understand how the new breed of interest reward products can deliver a better outcome for their clients, particularly in a higher rate environment.”
Phil Quinn, head of sales at Standard Life Home Finance:
“The increase in the average lump sum released takes it to levels last seen before the disastrous mini-Budget, which is a good indication of confidence returning to the later life market.
“However, it also highlights the increased costs that people are facing in later life, given the significant growth in the cost of living in that time, which is necessitating larger releases.
“The turbulence in markets has meant that some providers have pulled back, particularly when it comes to the maximum loan-to-values (LTVs) available.
“But this is changing; we recently launched two new higher LTV products on our Horizon, for example, opening up greater options for larger releases.
“That these products include interest reward functionality means borrowers are better positioned for managing the eventual costs of these solutions, leaving them in a far stronger position.”
