New customer activity drives growth
The equity release market recorded a strong opening quarter in 2025, with total lending reaching £665 million, according to the latest figures from the Equity Release Council.
The 32% year-on-year increase in total lending – marking a continuing trend of quarterly growth that has now extended to a full year – has been largely attributed to a 14% annual rise in new customers selecting lump sum products. This activity was supported by a broader range of offerings and a 2.8% annual rise in house prices.
Although the number of equity release plans agreed remained largely unchanged compared to Q1 2024, the market did experience a 5% dip from the previous quarter. Drawdown usage declined by 7%, while further advances fell by 6%, suggesting existing customers were more cautious in the current economic climate.
The average loan for customers choosing lump sum products — a group that made up 47% of the total in Q1 — stood at £127,414. That figure reflects an 11% rise from the previous quarter and a 23% jump year over year. Borrowers continue to use housing equity to pay off mortgages, adapt their homes for future needs and improve their quality of life.
More than 1,200 products remained available to advisers, offering customers considerable choice. However, average annual percentage rates for new products climbed to 7.15%, up from 6.67% a year earlier, as gilt yields continued to rise amid ongoing global economic concerns.
“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,” said David Burrowes (pictured centre), chair of the Equity Release Council.
“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.”
Lorna Shah (pictured far left), managing director of retail retirement at Legal & General, said the data shows that “equity release is becoming a more mainstream option” as retirees look for ways to supplement their income.
Leon Diamond (pictured second from left), chief executive of LiveMore, also acknowledged the growth in equity release but emphasised that it is only one part of the broader later life lending market. He said the total value of this segment was £5.6 billion in Q4 2024, reflecting a 38.6% annual rise.
“Later life lending is a broader market than equity release, offering everything from retirement interest only and standard interest-only to capital and interest repayment and term-based borrowing to meet the diverse and evolving needs of the 50-plus market,” he pointed out.
Scott Burman (pictured second from right), head of distribution at Pure Retirement, meanwhile added that lifetime mortgages continue to appeal to a range of customers, including those with higher-value properties. He cited internal data showing that 9% of Q1 business came from homes valued at £850,000 or more.
“The intersection of product innovation and a customer-centric culture within the market continues to make lifetime mortgages an attractive solution for many,” he said.
For Sadna Zaman (pictured far right), proposition development manager at Canada Life Home Finance, the new equity release figures show that property wealth is increasingly being viewed as a tool for financial planning.
“Equity release offers valuable flexibility, and product innovations have only enhanced its appeal,” she said. “It’s encouraging to see that growing numbers of customers are recognising these benefits – as reflected in the market data, which shows a significant year-on-year increase in new customers choosing equity release solutions.”
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