In 2024 the equity release market saw three successive quarters of growth for the first time since the mini-budget of Autumn 2022, indicating that the market has turned a corner and consumer confidence is returning.

Figures from the Equity Release Council’s latest quarterly market report show that more than 15,000 customers were active in the market for the first time in over a year and total lending in Q4 2024 rose to £622m, up by 16% from £525m in Q4 2023.

This is promising news after the slump of 2023 that saw rising interest rates and unattractive house prices lead older homeowners to become more cautious about tapping into their home equity, resulting in a 58% lending decline.

In the past decade, the number of people taking out lifetime mortgages has grown across every region except the North East, which saw significant growth up until  2022.

And despite the common perception that equity release is mostly happening in the property-rich south, figures from the ERC show that the areas showing the strongest growth were Wales (44%) East Midlands (23%) and the East of England (21%).

There has also been growth seen in suburban areas such as Manchester, Birmingham, and Leeds, where traditionally equity release has been the choice for homeowners in rural areas who have owned their property for a long time, that trend is now shifting.

The reason for borrowing has also changed. Whereas once upon a time retirees were thinking about funding a dream holiday or splashing out on a new car, now it is more needs-based.

The trend towards using equity release to pay off a current mortgage or debts has increased due to the cost of living pressures leaving many worrying that they will not be able to meet their monthly outgoings if bills keep increasing.

Data from Pure Retirement shows that the primary reason for under-65s to release equity from their homes is to repay mortgages and debts, which has remained at around 30% since 2019. This figure is twice as high as customers aged over 75 which is around 15%.

It also shows a differential between house prices. Among owners of properties valued at under £250,000, home improvements have been the most common reason for taking out a lifetime mortgage, with debt and mortgage repayments coming in second place.

And while applications from owners of properties of at least £850,000 show that gifting was historically the most common reason for releasing funds in 2023 and 2024, this figure has now halved to 12%, and debt and mortgage repayments have replaced it as the most common usage.

Despite signs that the market is recovering, the figures are still not close to where they were twenty years ago. Figures from the ERC show that the over-56 population has grown by 31% in the last two decades while mortgage approvals have dropped by 52%.

This decline at a time when there is better regulation and a larger range of products suggests that there is a significant unmet demand that will need to be addressed as the market recovers.

As our population and housing stock ages, it seems the demand for products that can serve older borrowers and home owners will continue to increase. The market will need to meet that demand and deliver a range of products that really can support older borrowers. It means that understanding the complexity and nuance around the future value of the property that will underpin these loans will continue to be crucial if we are really going to unleash the potential of this market – but potential there undoubtedly is.

In 2024 the equity release market saw three successive quarters of growth for the first time since the mini-budget of Autumn 2022, indicating that the market has turned a corner and consumer confidence is returning.

Figures from the Equity Release Council’s latest quarterly market report show that more than 15,000 customers were active in the market for the first time in over a year and total lending in Q4 2024 rose to £622m, up by 16% from £525m in Q4 2023.

This is promising news after the slump of 2023 that saw rising interest rates and unattractive house prices lead older homeowners to become more cautious about tapping into their home equity, resulting in a 58% lending decline.

In the past decade, the number of people taking out lifetime mortgages has grown across every region except the North East, which saw significant growth up until  2022.

And despite the common perception that equity release is mostly happening in the property-rich south, figures from the ERC show that the areas showing the strongest growth were Wales (44%) East Midlands (23%) and the East of England (21%).

There has also been growth seen in suburban areas such as Manchester, Birmingham, and Leeds, where traditionally equity release has been the choice for homeowners in rural areas who have owned their property for a long time, that trend is now shifting.

The reason for borrowing has also changed. Whereas once upon a time retirees were thinking about funding a dream holiday or splashing out on a new car, now it is more needs-based.

The trend towards using equity release to pay off a current mortgage or debts has increased due to the cost of living pressures leaving many worrying that they will not be able to meet their monthly outgoings if bills keep increasing.

Data from Pure Retirement shows that the primary reason for under-65s to release equity from their homes is to repay mortgages and debts, which has remained at around 30% since 2019. This figure is twice as high as customers aged over 75 which is around 15%.

It also shows a differential between house prices. Among owners of properties valued at under £250,000, home improvements have been the most common reason for taking out a lifetime mortgage, with debt and mortgage repayments coming in second place.

And while applications from owners of properties of at least £850,000 show that gifting was historically the most common reason for releasing funds in 2023 and 2024, this figure has now halved to 12%, and debt and mortgage repayments have replaced it as the most common usage.

Despite signs that the market is recovering, the figures are still not close to where they were twenty years ago. Figures from the ERC show that the over-56 population has grown by 31% in the last two decades while mortgage approvals have dropped by 52%.

This decline at a time when there is better regulation and a larger range of products suggests that there is a significant unmet demand that will need to be addressed as the market recovers.

As our population and housing stock ages, it seems the demand for products that can serve older borrowers and home owners will continue to increase. The market will need to meet that demand and deliver a range of products that really can support older borrowers. It means that understanding the complexity and nuance around the future value of the property that will underpin these loans will continue to be crucial if we are really going to unleash the potential of this market – but potential there undoubtedly is.

James Ginley, Director Technical Surveying, e.surv