Over 15,000 customers were active in the equity release market for the first time in over a year since Q3 2023, either agreeing new plans, taking drawdowns from existing plans or agreeing further advances (extensions) to existing plans according to the Equity Release Council’s latest quarterly market report for Q4 2024.

Total lending also rose for a third successive quarter to £622m, up by 16% from £525m Q4 2023. It meant that total annual lending for 2024 reached £2.3bn, compared with £2.6bn the previous year.

Although Q4 was the most subdued quarter of 2023 for lending activity, the opposite was true in 2024, which the Council sees as an encouraging sign of modest momentum building with returning consumer confidence.

Average loan sizes continued to increase for both drawdown and lump sum lifetime mortgages, helped by customers’ available equity being lifted by a 3.3% rise in average UK house prices over the last year according to the latest UK House Price Index.

Equity release product availability has also improved over the last year, with the average APR of new products launched in October 2024 more than one percentage point lower than a year earlier (6.47% vs. 7.48%, according to data from Advise Wise).

However, with 56% of new plans being drawdown rather than lump sum, customers are “clearly” holding out for the potential to make future drawdowns at lower rates if pricing continues to fall, the Council argues.

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.

“As consumer demand stabilises, the industry will continue to support older homeowners needs through product innovation and flexibility.  The average loan sizes of initial drawdowns have grown by 8%, with customers making use of reserve facilities to manage borrowing efficiently over time. This demonstrates the versatility of equity release in addressing diverse financial goals, from home improvements to supplementing retirement income.

“The final figures of 2024 show that the equity release market has turned a corner and there is cause for optimism. Interest rates have started to settle and if the growth seen in 2024 continues to gain momentum, 2025 will see more customers considering the option to access their housing equity using an increasingly diverse range of innovative products.”

The Council’s data is made up of aggregated figures collected from all UK equity release providers, encompassing business from advice firms across the market.

POSITIVE NUMBERS

Leon Diamond, CEO at LiveMore, said: “These are really positive numbers for the equity release sector. It is worth highlighting, though, that these figures refer solely to equity release lending and not to any of the other wider products available on the market to people aged 50 to 90 plus, such as standard capital and interest, interest-only and retirement interest-only. We offer 250 plus products to mid to later life borrowers, of which equity release is a part.

“By the end of 2024, our lending had increased 100% year-on-year, which compares favourably to the ERC’s 16% figure, supporting an innovative and holistic whole-of-market approach to later life lending. I expect this 16% figure will continue to grow in 2025 as the equity release – and later life market in general – continues to strengthen and innovate.

“As the market continues to widen and later life lending becomes increasingly mainstream, brokers will need technology and people to support them. Tools like the LiveMore Mortgage Matcher ® will sift through hundreds of solutions to suggest the best options for a broker’s customer – whether that’s equity release, a standard product or RIO, for example. This kind of AI technology assists with Consumer Duty and will speed up later life lending including equity release as we move through 2025 and beyond.”

STILL A LONG WAY TO GO

Mark Gregory, founder & CEO at Equity Release Group, commented: “Over the past year, various contributing factors have led to a change in consumer behaviour across the sector. 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.

“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.

“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.”

ENORMOUSLY ENCOURAGING

Ben Waugh, managing director of later life lender, more2life, added: “The later life lending market is looking increasingly positive. After the difficulties and economic challenges of the last few years, it’s enormously encouraging to see lending increase for three straight quarters and the number of active customers to hit levels we haven’t seen since the latter portion of 2023.

“Lenders and providers have worked hard on product innovation, responding to the expectations of the regulator by devising products which represent industry firsts on criteria, as well as acting as a hybrid between traditional mortgages and lifetime mortgages. This creativity has ensured that advisers enjoy a broad range of diverse products which better cater for the individual needs of their clients.

“The increase in usage of drawdowns, for example, shows that customers are making use of the flexibility these products now enjoy, dipping into their facility as and when necessary. Similarly, customers have far more flexibility should their circumstances change, with a greater breadth of options on early repayment charges, including our own Maxi Zero – the first lifetime mortgage to have no ERCs at all.

“Yet we are still just scratching the surface of what this sector could and should be. It’s vital for advisers and providers to continue working closely, not just to boost product development, but to open up these products to greater numbers of mainstream mortgage brokers who up to now have shied away from the specialist later life market.”