"While lending volumes may be subdued for now, there is no denying the giant strides which have been made in equity release product design and distribution, advice and public perceptions"
- David Burrowes, chair of the Equity Release Council
Green shoots of recovery are emerging in the equity release market as the UK faces "significant unmet demand for later life mortgages", according to the Equity Release Council’s Winter market report.
Product availability and lending criteria show signs of recovery
While lending has been subdued this year, product availability in the equity release market has rebounded as 2024 has progressed. The Council’s analysis of data from AdviseWise shows there were 212 more product launches than withdrawals (4,083 vs. 3,871) between August and October.
Rates have also stabilised, with average APRs for new lifetime mortgage products reaching a year-low of 6.31% in September 2024 – a marked improvement on the 7%-plus averages seen last year.
Despite fluctuating economic conditions, LTV ratios for lifetime mortgages at age 70 have edged back towards pre-pandemic levels.
This has widened access to larger sums of property wealth, helping homeowners who need to release more to meet obligations such as interest-only mortgage repayments.
Regional trends debunk the myth that equity release is a Southern phenomenon
During the post credit-crunch recovery over the last decade, the Council’s analysis shows the number of people taking out lifetime mortgage has grown across every UK region except the North East, which itself saw significant growth up until 2022.
Eight out of 12 regions registered double-digit growth between 2014 and 2023. Wales (+44%), the East Midlands (+23%) and the East of England (+21%) recorded the strongest growth rates, debunking the idea that those releasing equity are clustered in the property-rich south.
Comparing the regional spread of those taking out lifetime mortgages to the split of over-55s’ property wealth, both the South East (with 21% of property wealth vs. 12% of completions) and London (12% vs. 9%) actually under-index with a lower share of completions than property wealth. Northern Ireland (2% vs. 1%) also under indexed.
Of the remaining regions, eight outperformed with the South West (18% of equity release cases vs. 11% of property wealth) leading the pack, along with the East Midlands (9% vs. 7%) and North West (10% vs. 9%).
From 2005 to 2025
The Council’s analysis of regulatory data shows the total number of mortgage completions by people aged 56+ dropped from 175,260 in 2005 to just 84,576 last year.
This 52% fall at a time of significant product innovation – with more flexible lifetime mortgages including mandatory payment plans emerging alongside a variety of retirement mortgages – suggests that significant unmet demand will need to be addressed as the market recovers.
Increasing longevity means that the number of people aged 56+ has grown by 31% since 2005 to almost 21 million. However, mortgage approvals have followed a different trajectory with fewer older borrowers taking out products.
In 2005, there was one loan completion for every 91 people aged 56 and over in the UK, but the ratio has fallen to the extent that 2023 saw just one completion per 246 people.
David Burrowes, chair of the Equity Release Council, commented: “While lending volumes may be subdued for now, there is no denying the giant strides which have been made in equity release product design and distribution, advice and public perceptions in the post-regulation era.
“We know the current recovery will be a gradual process with no overnight return to the £6bn+ market of recent years. At the same time, the potential is there to go far beyond this high watermark in the future, and it’s important we turn this reset period into a positive.
“Property wealth has long been one of the most significant assets available to UK households. Advances in lifetime mortgage product design have made it significantly more attractive to access and are likely to be seen in years to come as a major milestone in bridging the gap between residential homeowner mortgages and the later life market.
“The pause in growth provides a chance to focus on the next steps needed to create the sustainable later life mortgage market of the future which our ageing population sorely needs. In a climate of growing pension challenges, property wealth will play a crucial role in bridging the gap between aspirations and affordability in later life.
“The Council is focused on working with industry, regulators, and policymakers to ensure consumers receive the best advice and make informed, confident decisions about their financial futures.”
