"Growth continues to be driven by new borrowers accessing greater amounts of housing equity to manage debt, boost income and support their wider families"
- David Burrowes - Equity Release Council
The equity release market grew by 10% year-on-year in Q2 2025, with older homeowners unlocking £636 million in property wealth, according to new data from the Equity Release Council.
The increase was largely driven by a rise in the value of new lump sum mortgages, with customers taking out an average of £126,422, up 14% from £110,969 in Q2 2024.
In total, 14,404 new and returning customers accessed equity in Q2. However, lending dipped 4% quarter-on-quarter, reflecting a quieter spring period amid wider economic headwinds and slower housing activity following the Easter break and Stamp Duty reforms.
“Today’s figures show a resilient equity release sector which, despite challenging economic headwinds, has recorded 10% year-on-year growth,” said David Burrowes, chair of the Equity Release Council. “Growth continues to be driven by new borrowers accessing greater amounts of housing equity to manage debt, boost income and support their wider families.”
Although the total number of plans taken out remained broadly flat compared to Q1, there was a small rise in both new plans (+2%) and total plans (+1%) on an annual basis.
Further advances, which account for less than 7% of total lending, saw a sharp 40% year-on-year rise in volumes, as existing customers borrowed more against higher property values and took advantage of increased product flexibility.
Flexibility remained a key theme. More than half of customers (55%) opted for drawdown products in Q2. These allow borrowers to take an initial release, averaging £65,856, while reserving an additional facility, which averaged £53,338, for future use.
The market continued to offer a broad range of options, with over 1,669 plans available at the end of June. However, the average annual percentage rate (APR) stood at 7.24% in Q2 2025, up from 6.64% the previous year. Rising gilt yields, driven by investor demand for stable returns amid global uncertainty, have contributed to the increase in borrowing costs.
Burrowes said long-term demand for equity release is only set to grow: “Fairer Finance predicts that by 2040, over half of UK households (51%) will need to rely on housing wealth to support their spending needs in later life and retirement.”
He also welcomed the FCA’s recent discussion paper on the future of the mortgage market: “We look forward to engaging with the FCA’s recognition that flexible lifetime mortgages for older borrowers are becoming ‘increasingly mainstream’. This is an opportunity to build on high advice standards and product innovation.”
Industry reaction
Richard Pike, chief sales and marketing officer at Phoebus, said the year-on-year growth shows continued confidence in the market, despite the quarterly dip: “The increase in average loan amounts and the growing popularity of flexible products like drawdown reflect how equity release is evolving to meet more complex customer needs.”
He added that operational efficiency will be critical: “Reducing costs and increasing automation is vital in a more challenging environment. Lenders need agility to adapt to shifting demand while maintaining service levels.”
Lorna Shah, Managing Director, Retail Retirement at Legal & General, said the data highlights equity release’s growing role in retirement planning: “These figures suggest equity release is being seen as a more mainstream product for achieving later-life goals.”
She added: “While not suitable for everyone, it’s important we have holistic conversations about financial planning in retirement, considering property wealth alongside pensions and other investments.”
