Figures from the Equity Release Council (ERC) showed an uplift in customer numbers as demand rebounded following a slow start to the year.
Customer numbers rose by 4% to 13,489, nearing levels seen during the same period a year earlier.
Of these, 5,307 homeowners accessed their housing wealth for the first time.
Among existing borrowers, there was a 12% lift in the number of people opting for a further advance, rising to 1,204, while the number of people returning for a drawdown was stable, with a 1% fall to 6,978.
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Equity release is proving to be the ‘fourth pillar’ of later life finances
Jim Boyd, chief executive of the ERC, said it was “encouraging” to see the increase in activity despite uncertainty in the market, with new customer numbers recovering to levels seen last year and lending growing over the quarter.
Boyd added: “The Financial Conduct Authority (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.”
Loan sizes show caution
The ERC found that the average size of a new lump sum loan dropped 6% over the quarter to £113,779, while the typical initial drawdown borrowing amount increased 2% to £63,642.
The report suggested this revealed borrowers still had a “cautious approach” to accessing housing wealth.
Average drawdown reserve facilities declined quarterly but were still 7% higher than last year at £56,893. The ERC said this suggested customers were still retaining access to future borrowing instead of taking the full loan upfront.
The average initial drawdown further advance loan size rose 11% compared to Q1 to £29,367, while the average lump sum further advances were 6% up on the year before.
Mark Gregory, founder and CEO of Equity Release Group, said the report reflected what his firm was seeing; customer confidence was “gradually returning”, but decisions were taking longer as homeowners weighed up borrowing costs.
He added: “Encouragingly, the increase in new customer activity and renewed optimism suggests that underlying demand for later life lending remains strong. The need hasn’t changed; more homeowners are looking at property wealth as part of a broader retirement planning strategy, but they’re approaching decisions with greater care and are looking for reassurance before committing.
“Firms that will thrive are those that remove complexity from the customer journey without compromising advice standards. As later life lending continues to become a more mainstream part of financial planning, improving accessibility and supporting advisers with better technology whilst maintaining exceptional consumer outcomes will be key to unlocking the market’s long-term potential.”
Advisers feel hopeful about equity release
The ERC gathered adviser sentiment on the market and found cautious optimism among professionals. Some 37% of firms expected enquiries to increase in Q3, while 35% said applications would rise and 37% said the same for completions.
Just a tenth of firms expected enquiries to fall, while 47% forecast application levels to remain stable.
Advisers also said some borrowers were choosing to delay decisions rather than abandon them altogether, as 74% said customers were waiting for rates to fall. A further 55% said borrowers could not achieve their desired loan to value (LTV).
Advisers believe the rate environment would improve, with 47% expecting rates to be lower than they were in 2025.
Holistic conversations will be essential to equity release growth
Will Hale, chief executive of Air, said the optimism from advisers highlighted the potential of the market for the rest of the year, but said: “If we’re to unlock the potential that bodies such as the FCA think this market can achieve we need to ensure that later life lending is not only being considered by specialist advisers, but across the entirety of the financial services sector when engaging with over-55 clients – including wealth advisers discussing retirement planning strategies, residential mortgage advisers exploring remortgage options, or customers wanting to help family members onto or up the property ladder.
“Effective referrals through intermediary channels and better signposting by mainstream lenders into specialists undoubtedly have a key role to play in delivering holistic advice for consumers and helping to make sure they can make an informed judgement on how best to fulfil their wants and needs based on an improved awareness and understanding of all of their potential options.”
Dave Harris, chief executive of More2Life, said the sector could not “afford to lose sight of the need to ensure that later life lending is not only a part of conversations being held by specialist advisers, but also across all financial conversations being held with over-55 clients throughout the financial services space”.
“It’s vital, if consumers are to have awareness of their full range of options and that they’re effectively signposted to all potential avenues so that they can make an informed choice,” Harris added.
Alice Watson, head of home finance at Canada Life, said: “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.”
