Equity release lending grows by 13.4%

Latest data from UK Finance has shown that there were 37,300 new loans advanced to older borrowers in Q2, up 13.4 per cent year on year. The value of this lending was £6.2bn, which was up 20.5 per cent compared with the same quarter a year previously. However the year-on-year comparison is inflated due to the dip in lending in Q2 2025, following the rush to beat stamp duty changes from April 2025 onwards.

There were 5,730 new lifetime mortgages advanced in Q2, down 1.7 per cent from the same quarter a year earlier and up 8 per cent compared to Q1. The value of this lending was £490mn.

Whilst there were 323 retirement interest-only mortgages advanced in Q2, up 5.9 per cent year on year. The value of this lending was £31mn, up 24 per cent from the same quarter a year previously. Residential Later Life loans in Q2 represent 7.8 per cent of all residential loans. BTL Later Life loans in Q2 represent 20.6 per cent of all BTL loans.

Will Hale, CEO of Air said “The thing that leaps off the page in this latest lending data is the stark gap between the number of over-55s taking out a residential mortgage and those taking out a lifetime mortgage.

“We have a long-standing advice gap in the UK when it comes to specialist later life lending and I’d argue that it is leading to poorer outcomes for many borrowers, particularly those in or preparing for retirement. Many of these customers still have an existing mortgage, carry other debt, have low levels of pension savings and face continued cost of living pressures. Taking a holistic view of needs and circumstances both now and into the future, alongside an understanding of the innovation we have seen in the later life lending product landscape, it can’t be right that the most suitable option for such a significant percentage of those over-55 is defaulting to a product transfer or a remortgage to another mainstream lender.

“Much of that is down to the fact that, as an industry, we are far too siloed: of the 35,000 UK advisers who hold mortgage permissions, only around 6,000 can also advise on equity release and we estimate that just 3,000 of these have recommended at least one lifetime mortgage in the last 12 months.

“It’s also the case that many borrowers, and advisers, for that matter, are unaware of the options available or still hold outdated views of equity release. The reality is that modern lifetime mortgages are incredibly flexible, allowing borrowers to service all, some or none of the interest, with rates that are fixed for life and with protections such as certainty of tenure and a no negative equity guarantee built in – some also come with zero early repayment charges. But if advisers aren’t even considering them as an option, borrowers will continue to be left in the dark and fail to access solutions that could be ideal for their circumstances.

“This issue is pressing given we have a rapidly ageing population who will increasingly need to tap into their housing wealth to fund retirement. It’s clear the FCA wants lifetime mortgages, and later life lending products more broadly, to play a greater role in supporting older customers enjoy a more comfortable and/or fulfilling later life – whilst at the same time helping address broader societal challenges around economic growth and pressure on public finances. Therefore, from both a customer outcome and commercial opportunity lens, advisers should be looking at their own processes now and developing a later life proposition sooner rather than later.”
 
Dave Harris, CEO of equity release lender more2life, said “Today’s later life lending figures from UK Finance reinforce our call to make it mandatory to signpost all later life lending options, including equity release, to all later life borrowers. In Q2, just 5,730 borrowers took out a lifetime mortgage, with 37,300 loans in total to older borrowers over the quarter. Against a backdrop of 15 million people in the UK undersaving for retirement, that number should be far higher than it is.

“Lenders carry just as much responsibility here as advisers. Mainstream lenders sit at the heart of the customer journey too, and when a client reaches the end of a fixed rate, they should be pointing them towards the full range of options, not just a product transfer.

“Recent research from Fairer Finance found that seven in ten over-55 homeowners have heard of equity release, but only 13 per cent have ever seriously considered it. If we were to collectively work together as industry to widen knowledge and understanding among both consumers and advisers, that figure would be a lot higher, and far more people would come away with a solution that could make a significant difference to their lives in retirement.

“We’re clear that with the right regulatory framework in place, the lifetime mortgage market has the potential to live up to the FCA’s billing as the fourth retirement pillar. But more importantly, it would lead to much better outcomes for those who need access to capital in later
life.”

Simon Webb, Managing Director of capital markets and finance at LiveMore, said “Today’s UK Finance figures show a mixed picture within later life lending. Lifetime mortgage volumes were down 1.7% year-on-year – a smaller decline than we saw in Q1, and volumes were actually up 8% on the previous quarter, so it’s too early to call this a settled trend. Retirement Interest-Only lending, meanwhile, grew 5.9% year-on-year, continuing a broader shift we’ve seen build over the past couple of years toward non-equity-release options, even though quarterly volumes remain a fraction of the size of the lifetime mortgage market.

“This isn’t a story about equity release declining in isolation. It’s happening against a backdrop where the wider mortgage market continues to feel the effects of higher rates and tighter affordability. Borrowers of all ages are being more selective about the debt they take on, and older borrowers are no exception. What we’re seeing is later life clients, and the brokers who advise them, taking a harder look at whether a lifetime mortgage is really the right fit, or whether an alternative product would serve them better long-term.

“The over-50s market remains a significant growth opportunity for brokers, particularly as alternatives to equity release continue to gain traction. While many older clients may have more complex finances, identifying the right solution is no longer the challenge it once was. With the right sourcing platforms and clearly defined criteria, brokers can efficiently navigate affordability and product suitability.”

Rachel Springall, Finance Expert at Moneyfacts said “Later life lending continues to play an important role for homeowners, the number of new loans is up 13.4% year-on-year, according to UK Finance. The value of this lending rose 20.5% to £6.2bn compared with Q2 2025, a notable uplift, but largely inflated by weaker lending reported after the stamp duty changes in April 2025.

“The volume of lifetime mortgage lending may have dipped year-on-year by 1.7%, but there has been a positive rise of 8% this quarter, versus Q1 2026. A lifetime mortgage could help homeowners who wish to use some of the wealth built up in their property to help fill a shortfall in retirement, or cover future care costs, without having to move home. Homeowners may want to release equity as a lump sum payment, but they could instead find a drawdown structure more appropriate for their circumstances. This is why it is so important to get good advice to explore the array of options but also to include family members in the conversation on how outstanding debt reduces the net value of an estate for inheritance tax purposes. Rising interest rates may be making the headlines, but this should not be a reason to halt homeowners from seeking advice.

“Retirement interest-only (RIO) mortgages can be a helpful option for older borrowers, with new loans up 5.9% year-on-year and lending worth £31m, up 24% versus Q2 2025. The growth in RIO lending highlights the importance of having a broad range of options available to older borrowers. The FCA is examining the lifetime and RIO mortgage sector to consider whether change is needed to meet consumers’ changing needs, and with interim findings expected in Q4 2026, it will be interesting to see whether this leads to further innovation and choice for older borrowers.”