The equity release market has returned to growth in the second quarter of 2026, with total lending increasing to £597 million – a 4 per cent rise on the previous quarter's £574 million. New data from the Equity Release Council shows that 13,489 customers used equity release products between April and June, also up 4 per cent quarter-on-quarter.
Average withdrawals reach £113,779
The average new lump-sum borrowing fell 6 per cent over the quarter to £113,779, according to the industry body's latest report. Equity release allows homeowners aged 55 and over with a property worth at least £70,000 to unlock part of their home's value as tax-free cash without having to move.
The Financial Conduct Authority has recently referred to equity release as the “fourth pillar” of later life income, alongside pensions, savings and investments. This designation comes as the market shows signs of maturing, with more homeowners viewing property wealth as a mainstream part of retirement planning.
Industry leaders see encouraging signs
Jim Boyd, chief executive officer of the Equity Release Council, said: “It is encouraging to see this increase in activity despite the inherent challenge of continuing domestic and international uncertainty.
“New customer numbers have recovered to the same level as a year ago, while overall lending and customer activity have both increased over the quarter.
“The FCA recently described later life lending as a fourth pillar alongside pensions, savings and investments. Today’s figures suggest that transition is already underway. As retirement funding becomes increasingly dependent on a mix of assets, housing wealth is becoming a more mainstream part of financial planning, supported by stronger consumer protections, greater product flexibility and high-quality advice.”
Bank of England warning on mortgage repayments
The growth in equity release comes against a backdrop of Bank of England forecasts that over five million homeowners should expect their monthly mortgage repayments to increase by the end of 2028. That figure is up from the four million projected by the Bank in December.
Alice Watson, head of home finance at Canada Life, explained: “In the first half of this year, against a backdrop of higher interest rates and ongoing cost of living pressures, fewer customers used equity release to fund big ticket items such as holidays and car purchases. Instead, we saw more customers using their property wealth to build financial resilience by clearing existing mortgages or consolidating debts.
“The regulator’s ongoing work to shape the later life lending market and help homeowners navigate their financial lives will drive further growth in the sector. As people live longer and pension adequacy comes under increasing scrutiny, property wealth is set to play an ever more crucial role in helping secure long term financial stability in retirement.”
Changing patterns in equity release usage
The shift in customer behaviour is notable. Rather than using equity release for discretionary spending, more over-55s are now prioritising debt consolidation and mortgage repayment. This aligns with the broader economic environment, where higher interest rates have increased the cost of borrowing.
The Equity Release Council's report highlights that the average new lump-sum borrowing has decreased, suggesting customers are being more cautious in their borrowing amounts. This trend indicates a more considered approach to unlocking property wealth, with many homeowners seeking to maintain financial stability rather than fund immediate consumption.
Property wealth as a retirement pillar
The FCA's recognition of equity release as a fourth pillar of later life income underscores its growing importance in retirement planning. With people living longer and pension adequacy under increasing scrutiny, property wealth is becoming a crucial component of long-term financial security.
Industry experts believe that the combination of stronger consumer protections, greater product flexibility, and high-quality advice is making equity release a more attractive option for over-55s. The market's return to growth, despite ongoing economic uncertainty, suggests that homeowners are increasingly viewing their homes as a valuable financial asset that can support their retirement needs.
As the Bank of England's mortgage repayment forecasts indicate, many homeowners will face increased financial pressure in the coming years. For those aged 55 and over, equity release offers a way to access the wealth tied up in their properties, providing a potential solution to bridge the gap between pension income and retirement expenses.
