Equity release lending fell in the first quarter of 2026 as economic uncertainty and higher borrowing costs delayed customer decisions, according to the Equity Release Council.
Total lending reached £574 million in Q1, down 9% from £632 million in the previous quarter and 14% lower than the £655 million recorded a year earlier.
The number of new and returning customers accessing housing wealth also fell, with 12,958 customers using equity release in the quarter, down 7% on Q4 and 10% year on year.
The Equity Release Council said the slowdown reflected uncertainty in the UK and global economies, with the conflict in Iran contributing to higher interest rates and borrowing costs.
The trade body said adviser feedback suggested demand remained resilient, with 45% of firms reporting an increase in enquiries compared with the previous quarter, while 33% reported a fall.
Applications also rose for some firms, with 38% reporting an increase over the quarter, compared with 34% reporting a decrease.
David Burrowes, chair of the Equity Release Council, said: “It’s disappointing to see activity fall in Q1, particularly given the significant uplift in enquiries. However, like other parts of the mortgage market, it’s clear the uncertainty dominating the UK and global economies, driven by the conflict in Iran, is contributing to higher interest rates and borrowing costs – while tighter loan-to-value availability is further slowing consumer decision-making, delaying completions.
“What we’re seeing is not a lack of demand – enquiries are up – but a delay in cases coming through. Advisers are reporting strong levels of interest, but customers are taking more time and, in some cases, pausing decisions altogether.
“It could well be that we are set for an uplift as conditions stabilise and delayed cases begin to complete. Over the longer term, the underlying drivers of demand remain in place, and housing wealth continue to play an important role in supporting financial resilience later in life.”
New plan volumes fell 8% over the quarter to 4,868, while returning drawdown customer numbers declined by 2% to 7,019.
Further advance activity saw the sharpest fall, down 27% over the quarter to 1,071.
Average loan sizes also declined across most product types. New lump sum lending fell 2% over the quarter and 5% year on year to £121,196, while initial drawdown lending fell 8% on the quarter and 10% annually to £62,633.
Average drawdown reserve facilities rose by 6% over the quarter to £61,307.
BROKERS EXPECT STRONGER PIPELINE
The Council said adviser sentiment pointed to a possible improvement in Q2. It said 46% of firms expected enquiries to increase, while 50% expected applications to rise.
One in five firms expected enquiries to fall in Q2, with the same proportion expecting applications to decline.
Jim Boyd, chief executive officer of the Equity Release Council, said: “Broker forecasts point to a strengthening pipeline, with adviser feedback suggesting demand is being deferred, rather than disappearing. As uncertainty starts to ease, we expect more of this activity to feed through, supporting a recovery in the months ahead.
“Releasing equity will inevitably become a mainstream part of retirement planning as advice and products become less siloed and retirement finance inadequacy worsens. Almost four in 10 (38%) of future retirees are on track to fall below the Pensions UK ‘minimum standard’.
“With demographic and economic pressures building, demand is likely to grow, supported by product changes that make the secure but flexible financing options provided by modern equity release products increasingly attractive for consumers.”
The Equity Release Council said more than 680,000 homeowners had accessed £50 billion of property wealth through Council members since 1991.
MARKET COMMENT
Simon Webb, managing director of capital markets and finance at LiveMore, said the figures should not be viewed in isolation from the wider later life lending market.
He said: “While equity release lending has slowed, we welcome the FCA’s upcoming Later Life Mortgages Market Study and its desire to open up the later life lending market and improve access for borrowers. At LiveMore, we believe advice in this space must be truly holistic – clear, balanced and tailored to a borrower’s individual circumstances.
“Equity release can be an important solution for some, but it’s not the only option. Retirement interest only and standard term-based mortgages (interest only, capital and interest repayment and part and part) can all provide a more viable solution for some borrowers than equity release.
“Customers should be supported to consider the full range of products available, ensuring they make informed decisions that best suit their needs. And likewise, we shouldn’t use equity release as the sole indicator of market growth – increased knowledge of alternative products will undoubtedly impact equity release lending figures going forward.”
ENCOURAGED BY DEMAND
Will Hale, chief executive officer of Key Equity Release, said the completion figures reflected uncertainty around the November Budget and the more recent geopolitical environment.
Hale said: “However, at Key we have been encouraged by the level of customer demand that we have seen so far in 2026. Many of these enquiries been driven by customers feeling the pain of higher living costs and particular by those existing older mortgage borrowers that face eye-watering increases in monthly repayments as they come off cheap 5 year fixed rate details.
“The demand we are seeing reinforces the positive medium to long-term outlook for the later life lending market. Aside from those needing a more flexible way to manage existing debt, with over 60s owning more than £3.84 trillion of unencumbered property equity, the home has to be a major part of retirement planning for the future – helping people to boost income, fund capital purchases and/or to facilitate tax efficient intergenerational wealth transfer strategies.
“Many homeowners aged 55-plus could potentially benefit from modern lifetime mortgages which can play a central role in supporting lifestyle objectives and increasing financial resilience. That is why it is vital that advisers of all types whether they are mainstream mortgage advisers, wealth advisers or generalist IFAs should be offering their customers access to all options whether by widening their scope of advice to include these products or by forming referral partnerships with trusted specialists.
“The FCA’s Later Life Mortgages Market Study recognises the importance of the market and the need for change to meet consumer needs. But it is clear that consumer awareness of later life lending options remains low and that advisers who do not specialise in the sector are still not engaging with the massive potential of later life lending.
“Advice silos and outdated views that still see equity release viewed as a last resort by some advisers are impacting customer access to products such as modern lifetime mortgages and should be regarded as a major risk to the achieving good customer outcomes.
“The latest lending figures published by the Council should serve as a timely reminder of the work that still needs to be done around evolving to holistic advice and consideration of all options if distributors are to meet their Consumer Duty obligations.”
“A MORE CAUTIOUS AND CONSIDERED CUSTOMER”
Mark Gregory, founder and chief executive officer at Equity Release Group, said the figures highlighted pressure in the market, but not the disappearance of demand.
Gregory said: “The latest figures from the Equity Release Council highlights pressures in the market, with a decline in both lending and customer numbers, however demand is not disappearing, but rather reflects a more cautious and considered customer.
“What we’re seeing is a shift in consumer behaviour. Customers are still engaging with equity release – in fact we’ve experienced double digit growth in last quarter – but they are often taking smaller initial amounts and prioritising flexibility, suggesting that people are looking to retain control in an uncertain economic environment.
“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.
“At the same time, the reduction in new customers highlights an ongoing challenge around awareness and accessibility. For many, the need is there, but the journey to advice is limited or can feel complex to navigate.
“We’re seeing a market that is becoming less about volume growth and more about the quality of engagement. Firms that are investing in technology, improving access to advice and building more diverse distribution models are continuing to see positive momentum, even in a flatter market.
“We are also seeing how customers are using equity release as part of a broader financial strategy, from managing financial pressures to supporting family members, equity release is now shaping the customers wider financial planning goals.
“Looking ahead, the fundamentals of the market remain strong. As consumer confidence stabilises and innovation continues across advice and product development, there is a clear opportunity for more sustainable growth, driven not just by demand, but by how well the industry responds to it.”
“NAÏVE TO EXPECT ANYTHING ELSE”
Simon Hayton, managing director of Pure Retirement, said: “While it’s naturally disappointing to see reductions in case and lending volumes on both a quarterly and annual basis, it would be naïve to expect anything else given wider geopolitical movements and the subsequent effects on wider financial markets.
“This is something that has also been seen in the residential mortgage market, highlighting the wide-reaching effects of ongoing uncertainty and associated effects on consumer confidence.
“However, the key takeaway is the increase in consumer enquiries and interest, signifying the extent to which later life lending is becoming a mainstream financial planning tool among over-55s.
“As an industry, we now need to ensure that products and processes meet consumer needs, helping to ensure that when customers are comfortable in proceeding, they feel that they have the best possible experience as they seek to reach their financial goals.”
