Equity release market seeing 'encouraging momentum' with lending up 16%: ERC

More than 15,000 customers were active in the equity release market for the first time in over a year in Q4 2024, either agreeing new plans, taking drawdowns from existing plans or agreeing further advances to existing plans, the latest Equity Release Council data shows.

Total lending also rose for a third successive quarter to £622m, up by 16% from £525m in Q4 2023. However, total annual lending for 2024 reached £2.3bn, compared with £2.6bn the previous year.

Yet, while Q4 was the most subdued quarter of 2023 for lending activity, the opposite was true in 2024 in an "encouraging sign of modest momentum building", the Council says.

Average loan sizes continued to increase for both drawdown and lump sum lifetime mortgages, helped by customers’ available equity being lifted by a 3.3% rise in average UK house prices over the last year.

Equity release product availability has also improved over the last year, with the average APR of new products launched in October 2024 more than one percentage point lower than a year earlier (6.47% vs. 7.48%, according to data from Advise Wise).

However, with 56% of new plans being drawdown rather than lump sum, customers are clearly holding out for the potential to make future drawdowns at lower rates if pricing continues to fall.

David Burrowes, chair of the Equity Release Council, said: “The Q4 2024 data demonstrates encouraging signs of recovery in the equity release market, with three consecutive quarters of growth in lending and total plans for the first time in two years. This is a testament to the resilience of the market and its ability to adapt to shifting economic conditions.

“It’s particularly notable to see a steady increase in returning customers using further advances, with a 27% rise this quarter, reflecting the confidence that homeowners have in leveraging their property wealth responsibly. This is further supported by the gradual rise in UK house prices, which has given many customers the opportunity to access sufficient equity to meet their financial needs. 

“As consumer demand stabilises, the industry will continue to support older homeowners needs through product innovation and flexibility.  The average loan sizes of initial drawdowns have grown by 8%, with customers making use of reserve facilities to manage borrowing efficiently over time. This demonstrates the versatility of equity release in addressing diverse financial goals, from home improvements to supplementing retirement income.

“The final figures of 2024 show that the equity release market has turned a corner and there is cause for optimism. Interest rates have started to settle and if the growth seen in 2024 continues to gain momentum, 2025 will see more customers considering the option to access their housing equity using an increasingly diverse range of innovative products.”