After a slow start to 2026 the equity release market returned to growth during the second quarter of 2026, according to the latest report from the Equity Release Council (ERC).
The Q2 data showed total lending increased to £597 million during Q2 2026, up 4% on the previous quarter (£574 million). Overall customer numbers also rose 4%, to 13,489.
The strongest growth came from new customers, with 5,307 homeowners accessing housing wealth for the first time – a 9% increase on the previous quarter and returning to the same level recorded in Q2 2025. An accompanying survey of advisers suggests continued confidence for Q3 as firms report growing enquiries and applications, the ERC said.
Existing customers also remained active in Q2 2026: further advance customer numbers increased 12% to 1,204, while returning drawdown customer numbers remained broadly stable, easing 1% to 6,978.
Average borrowing patterns continued to reflect a “cautious approach” to accessing housing wealth, the ERC said. Average new lump-sum borrowing fell 6% over the quarter to £113,779, while average initial drawdown borrowing increased 2% to £63,642.
Although average drawdown reserve facilities fell compared with Q1, they remained 7% higher than a year earlier at £56,893, which the ERC suggests means customers continue to value retaining access to future borrowing rather than taking the maximum amount upfront.
Further advance borrowing also strengthened during the quarter. Average initial drawdown further advances increased 11% compared with Q1 to £29,367, while average lump-sum further advances remained 6% higher than a year earlier.
Equity release was recently referred to as the “fourth pillar” of later life income by the Financial Conduct Authority, alongside pensions, savings and investments. The sector is currently the subject of a market study by the regulator to examine whether change is needed to enable the lifetime and retirement interest only mortgage sector.
Lifetime mortgages account for more than 99% of the market, allowing customers to borrow against their homes without making repayments unless they choose to. The loan and accrued interest are repaid when the customer dies or moves into long-term care.
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.”
The figures reflect how housing wealth is increasingly gaining traction as a core pillar of later life financial planning, according to Alice Watson, head of home finance at Canada Life.
She 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.”
Looking more closely at the numbers reveals a concerning pattern for Will Hale, CEO of Key Equity Release. He said: “It is important not to ignore the longer-term picture, which is less positive.
“Lending in Q2 was 6% lower than for the same quarter in 2025 and new customer numbers were just 40% of the level seen at the peak of the market in Q3 2022… the lifetime mortgage market continues to be operating at a fraction of its potential given the obvious growing customer and societal need coupled with the innovation seen in the product landscape.
“If the later life lending market is to be the ‘fourth pillar’ of retirement funding, as is the stated aspiration of the FCA, then structural issues around customer awareness/understanding and distribution silos need to be urgently addressed. As the regulator progresses its market study and consults on holistic advice, mainstream mortgage advisers and wealth managers/IFAs need to adopt a broader perspective and ensure that the home is front and centre of financial planning decisions and that all product options are considered when making a recommendation – including modern lifetime mortgages.
An ERC survey of advisers suggests sentiment is cautiously optimistic, with more than a third (37%) of the 54 firms surveyed expecting enquiries to increase during Q3. A similar proportion expect applications (35%) and completions (37%) to rise.
Only one in 10 firms expect enquiries to decline, while almost half (47%) anticipate application levels remaining broadly unchanged, suggesting advisers expect recent improvements to continue through the second half of the year.
Advisers also reported that some customers continue to delay decisions rather than abandon them altogether. Almost three quarters (74%) said customers were waiting for borrowing costs to improve, while just over half (55%) cited customers being unable to achieve the loan-to-value they required. Interest rate expectations also appear more positive, with almost half (47%) of firms expecting rates to be lower than they were during 2025.
David Burrowes, chair of the Equity Release Council, said: “There are no two ways about it: today’s market is very different from that of a decade ago. Customers increasingly want flexibility, choice and the ability to tailor borrowing around changing circumstances, which continues to drive demand for drawdown products.
“As confidence continues to improve, the market is well placed to support more people looking to incorporate housing wealth into their retirement planning. The priority remains ensuring consumers have access to high-quality advice and strong protections so they can make informed decisions that reflect their individual circumstances.”
