Homeowners extracted 32% more wealth from their properties in the first three months of 2025 than they did last year, according to new figures, with experts suggesting they are trying to avoid looming changes to inheritance tax rules.
A total of £665 million worth of housing equity was accessed by customers using equity release In the first quarter of this year, according to the Equity Release Council’s (ERC) latest quarterly market report.
This is up from £504 million for the same period a year ago, and is the fourth successive quarter of growth in equity release.
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Equity release is a type of mortgage. It is a way for homeowners aged over 55 to unlock some of the equity they have built up in their homes over the years of paying their original mortgage.
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They gain access to cash – as a lump sum or regular payments – without having to move home, in the form of a loan from an equity release company, which is typically repaid when the homeowners die or move into a care home and their property is sold.
Growth in the equity release market has been driven by a significant increase in new customers taking lump sums, up 14% compared to a year ago, according to the ERC.
The average amount borrowed by the 47% of homeowners who chose a lump sum product was £127,414. This is up 11% on the previous quarter and up 23% on the same time last year.
We look at what to consider when choosing between downsizing or equity release in a separate guide.
Can you use equity releases to avoid inheritance tax?
Experts have suggested the increase could be in response to measures announced in the Autumn Budget, which will see pension wealth included in inheritance tax calculations from 2027.
After decades of rising house prices, it is expected that once both property wealth and pension wealth is taken into account, thousands more families will be required to pay inheritance tax at 40% when they inherit.
David Forsdyke, head of later life finance at Knight Frank Finance, says: "Among the fastest growing parts of the market is among wealthy homeowners with sufficient levels of income but concerns about inheritance tax.
“They are raising funds through equity release to move funds into more IHT tax efficient investments, perhaps through their beneficiaries."
Sadna Zaman, proposition development manager at Canada Life Home Finance, which provides equity release, agrees: “Evolving financial planning considerations, such as forthcoming changes to inheritance tax, may be prompting more homeowners to consider equity release as a strategic option,” she says.
How homeowners may use equity release to unlock housing wealth to fund their lifestyle
For some homeowners, the appeal of equity release may be more to deal with rising costs, and the struggle to stretch pensions for decades as life expectancy increases.
Zaman says: “With more people living longer and traditional retirement income sources under pressure, it’s clear that many homeowners are proactively exploring property wealth as a valuable tool to achieve financial stability and aspirations in later life.”
Maturing interest-only mortgages may be another prompt to use equity release to clear outstanding housing debt.
Richard Pike, chief sales and marketing officer at financial software company Phoebus, says: “Four consecutive quarters of growth and a notable rise in average loan sizes suggest homeowners are increasingly turning to equity release to navigate financial challenges, repay mortgages, or fund lifestyle changes.
“With many older homeowners still navigating high living costs and interest-only mortgage maturities, tapping into property wealth is no longer a last resort – it’s becoming a strategic choice.”
Pros and cons of equity release
Equity release allows homeowners aged over-55 to access a tax-free cash sum from their home's equity without having to move. But it also carries potential risks like the possibility of accumulating debt, and will reduce the amount of housing wealth that can be passed on to loved ones on death.
It’s important to take financial advice from an FCA-regulated equity release adviser before opting for equity release.
Pros of equity release:
- Can provide a lump sum of tax-free cash for any purpose
- Allows homeowners to access their property wealth without having to sell their home
- In some cases there are no ongoing monthly repayments required
- It’s possible to ringfence a portion of your home's value for your beneficiaries, so they can inherit it
- Affordability assessments are typically less onerous than standard mortgages
- Provides the option to gift money before death reduce the value of your estate for IHT purposes.
Cons of equity release:
- Equity release is a type of loan and interest is payable on the debt, which can build up significantly over the years leaving less for your loved ones to inherit
- The maximum percentage of equity you can release typically ranges from 20% to 60% of your home's value
- You may get less than market value for the portion of equity you release in your home
- The lump sum received from equity release can affect eligibility for certain means-tested benefits
- It can be difficult to remortgage or move home once you have opted for equity release
- Early repayment charges can apply if you repay the equity release loan sooner than expected.
