Equity release lending rises for fourth successive quarter

The equity release market had a strong start to the year with £665m worth of housing equity accessed by customers, the latest data from the Equity Release Council shows. This is a 32% increase compared to Q1 2024 (£504m) and the fourth successive quarter of growth.

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 of 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, up 11% on the previous quarter and up 23% on the same time last year.

While product availability remained good 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% vs. 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.

“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.”