Increasing numbers of older homeowners are accessing equity release products to support their later-life needs and even bypass NHS waiting lists.
Higher interest rates and slowing house price growth had reduced the attractiveness of equity release in recent years but the latest industry data suggests consumers have been returning to the product in recent months, especially as the cost of retirement soars.
Figures from UK Finance show in the first three months of 2025, there were 5,620 new lifetime mortgages – the most popular type of equity release product – a rise of 11% in a year. The value of this lending was £530 million, which was up 39.5% compared with the same quarter a year previously.
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The market for retirement interest-only mortgages is smaller – at 339, up 19% in a year. The value of this lending was £33 million, up 17.9% versus the same quarter a year previously.
There were also 38,510 new loans advanced to borrowers aged over 55 in Q1 2025. This is up 34% year on year. And at £6.1 billion, the value of this lending was up 42.6% compared with the same quarter a year previously.
Jim Boyd, CEO of the Equity Release Council, commented on the UK Finance Later Life Lending Statistics: “The market is moving swiftly from niche to mainstream with increasing numbers of older customers relying on advisers to help them navigate their various options which include equity release, retirement interest-only mortgages and later life mortgages.
“However, while the rise in equity release borrowing echoes the Council’s own Q1 figures, there is certainly scope for more growth as half (51%) of UK households are expected to need to use housing wealth to support their spending needs in retirement.”
What are people using equity release for?
Equity release lets homeowners over age 55 access the cash locked up in the property typically through a lifetime mortgage.
Borrowers can take a lump sum and then reserve the rest to access at a later date so they only owe interest on what they drawdown.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said: “Lifetime mortgages still dominate the landscape – making up by far the majority of equity release deals. These allow people to borrow against their home, then the interest rolls up, to be repaid when the property is sold – along with the loan itself.
“However, we’re also seeing some growth in retirement interest-only mortgages, in which the interest is paid as you go along, so only the initial loan is repaid when you sell up or pass away.
“They’re both an option for those with plenty of property equity and shortfalls elsewhere. Lifetime mortgages can work for some people who can’t meet everyday living costs from their pension, while retirement interest-only mortgages can provide a one-off injection of cash for a specific reason – such as home improvements or healthcare,” she said.
The product appears to be filling gaps in access to healthcare amid reduced NHS services and long waiting lists.
“Due to NHS delays as a result of the pandemic, we've also seen people turning to equity release to fund hip or knee replacements,” says Scott Gallacher, director at financial advisory firm Rowley Turton.
“There's little point having capital tied up in your home but being unable to enjoy your retirement due to a dodgy hip or knee.”
He has also seen people use the product to fund solar panels so they can reduce their energy bills.
The risks of equity release
Equity release is a useful product if you are looking to access finance later in life and don’t fit a traditional lender’s requirements.
The industry has faced criticism in recent years though due to high fees and unclear product terms, but it has tried to improve its image with more flexible and transparent products.
Lifetime mortgages are priced higher than standard mortgage rates at between 7% and 8% compared with around 5% for a traditional home loan.
The main risks are leaving your loved ones with a bill once you pass away or move into care– usually meaning the family home has to be sold – and ultimately limiting the inheritance you can leave.
Some modern-day equity release products let borrowers make repayments and you can usually reserve a portion of the proceeds of the property sale to leave as an inheritance, which as Turton points out is “more of a concern for your children than you".
Equity release shouldn’t be entered into without fully understanding the implications for you and your family.
Coles said: “There are some hefty fees, and the interest is higher than on a standard mortgage. With a lifetime mortgage, this will all roll up and need to be repaid after you die, so the longer you borrow for, the more it will cost. Compounding is working against you, so over a ten-year period, the amount payable on the loan can easily double."
Equity release also can stop you from downsizing later if you change your mind, she pointed out: "Sometimes the debt has eaten so far into the equity in your home that if you were to sell up and repay the loan, you wouldn’t be able to afford a smaller place.”
She added: “Retirement interest-only mortgages, meanwhile, run the risk of raising your outgoings, which can mean you end up building up problems for later, once you’ve spent the money borrowed against your home. You need to be aware of exactly how much it will cost each month, and how you will afford it.
“For many people it could be a last resort option, later in life. If you can’t sell your home and need to pay for care, it could be something to consider. However, even then it’s worth talking to your family first and considering whether you’d be better off downsizing to free up the money.”
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