Equity release lending grew by 11% from £2.3bn to £2.57bn in 2025, with spending on home improvements driving up demand.
Figures released by the Equity Release Council revealed that just over a quarter of borrowers used their housing wealth to clear an outstanding mortgage balance, the second-most popular reason for later life borrowing after home improvements at 40%.
Some 21% spent the cash on holidays, 13% gifted it and 6% borrowed money for large purchases, such as a car.
Equity release in Q4
In the final three months of the year, equity release providers lent £632m, a 1.6% rise on Q4 2024.
The average release rose to £123,174 in Q4 2025, an increase of 5.7% year-on-year.
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Some 1,468 customers returned for further advances this quarter, compared to 1,411 in Q4 2024.
Looking ahead
Advisers polled by the council were mostly optimistic for the outlook this year, with 80% forecasting the market would lend more than it did last year, just 2% predicting a fall and remaining advisers suggesting there would be no change.
David Burrowes, chair of the council, said: “Increasingly, releasing equity is part of homeowners’ retirement plans.
“Almost four in every 10 future retirees are on track for a retirement income below the Pensions UK ‘minimum standard’. Demographic and economic pressures mean the demand is there and likely to grow. Innovations in product design are making modern equity release more flexible and more secure, making it more attractive to consumers.”
Sustained long-term growth, says the council, will be supported by more collaboration across the sector and with the regulator.
A consumer survey released earlier this month revealed that only 7% of homeowners who took financial advice about their retirement plans said their adviser brought up equity release unprompted as a means of support in retirement – an issue that is on the regulator’s radar.
In Q1, the Financial Conduct Authority (FCA) is set to launch a focused later life lending market study examining how mortgages and property-based solutions can better support consumers borrowing into retirement.
Burrowes described it as an “important step” and added: “That regulatory focus, combined with collaboration and continued product innovation, gives us confidence in the sector’s long-term direction. We have never had a better opportunity to bridge the retirement later life funding gap.”
Sadna Zaman, home finance proposition manager at Canada Life, said: “It has been hugely positive to see the regulator focus on the potential of the later life lending sector to meet the evolving needs of customers. With a forward-looking market study and a review of advice rules scheduled for early this year, the regulator has set the stage for a busy year of policy development and engagement. This will help drive further growth in the sector, offering advisers and their clients greater choice and support in later life lending.”
