For the first time since Q3 2023 more than 15,000 customers became active in the equity release market according to the latest quarterly market report from the Equity Release Council, tracking activity across new plans, accessing drawdowns from existing plans, or agreeing to further advances
In Q4 2024, total lending rose for the third consecutive quarter, reaching £622 million—an increase of 16% compared to £525 million in Q4 2023. Annual lending for 2024 totalled £2.3 billion, slightly down from £2.6 billion in the previous year.
Despite Q4 being the least active quarter for lending in 2023, the opposite trend was seen in 2024, indicating a potential recovery driven by increased consumer confidence. Additionally, the average loan size continued to grow for both drawdown and lump sum lifetime mortgages, fuelled by a 3.3% rise in average house prices over the past year, as reported in the latest UK House Price Index.
Equity release product availability also improved in the last year, with the average APR of new products launched in October 2024 dropping by over one percentage point compared to the previous year (6.47% versus 7.48%), according to Advise Wise data.
The Equity Release Council noted that 56% of new plans were drawdown products rather than lump sum plans, suggesting that customers are holding out for the possibility of making future drawdowns at lower rates if pricing continues to decrease. 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.”
Mark Gregory, Founder & CEO at Equity Release Group said that over the past year, various contributing factors have led to a change in consumer behaviour across the sector. He said:
“As well as macroeconomic factors, the equity release sector faced additional challenges due to consumer apprehensions. This impacted the market and caused a threat to people’s financial goals. Whilst the desire and intention was there, pressures and concerns due to the cost-of-living crisis for example were prolonging people making important financial decisions, or they required financial guidance and advice but were constrained by a lack of general awareness or visibility. For instance, there’s little or no media advertising at the moment, therefore awareness of financial options is low.
However, optimism did return in the second half of last year. Similarly to findings from the Equity Release Council, at Equity Release Group we too have seen an increase in demand during Q4 of 2024. We’ve seen a sharp rise in lead figures, which rose by over 30% in comparison to 2023, as well as an increase in applications, which grew by 16% YoY. Also, smartER, which affords people the freedom to research equity release plans in their own time, without feeling any pressures, saw a 3.5% elevation in sales in comparison to 2023 YoY vs other channels.”
He said that digital developments therefore are “certainly continuing to create new opportunities” to meet consumer desires, but there’s still a long way to go in terms of product development to ensure we demands in this higher rate environment. He continued:
“The market for later life planning is diverse, with consumers now having to prioritise immediate expenses as opposed to longer-term goals, therefore usage is shifting. However with accessible, clear and comprehensive information available early on, consumers can feel in control of their situation before gaining the financial advice they need. Accurate, online tools are a necessity within the sector and when product development aligns with this, I believe there will be even more appetite and heightened growth.”