Equity Release in the UK Market: Latest Trends & Data

The UK equity release market has experienced some notable changes over recent years. The COVID-19 pandemic saw activity dip significantly, but the sector has since begun to recover. Recent data from the Equity Release Council, including their Q4 2024 update, provide fresh insights into the evolving market landscape.

• Q4 2024 Surge:
  The Equity Release Council’s Q4 2024 report highlighted a notable rebound in the market. The number of new equity release plans agreed in Q4 2024 rose by approximately 15% compared to Q4 2023. This increase reflects renewed consumer confidence as economic conditions stabilize and interest rates remain favourable.

• Lifetime Mortgage Drawdowns:
  Throughout 2024, lifetime mortgage drawdowns reached an estimated total of around £2.3 billion. This figure marks a strong recovery from the significant downturn experienced during the early stages of the pandemic when activity had slipped to a four-year low.

• Interest Rate Environment:
  Interest rates for lifetime mortgages have continued to decline, with many products now available at rates between 2.3% and 3%. This is particularly attractive compared to many fixed-rate mortgage products available on the market, and it is expected to fuel further growth in equity release activity in 2025.

What is equity release?

Equity release allows homeowners aged 55 and over to access some of the wealth tied up in their properties. It provides an opportunity to obtain cash either as a lump sum or in several smaller amounts. This can be particularly useful for supplementing retirement income, funding home improvements, or even assisting family members.

There are two primary ways to release equity from your home:

Lifetime Mortgages:
This is the most common method. With a lifetime mortgage, you take out a loan secured against your home, which remains your main residence. You can choose to reserve a portion of your home’s value as an inheritance for your family. You may either make repayments or let the interest compound, with the total debt repaid when you pass away or move into long-term care.

Home Reversion Plans:
With this option, you sell all or part of your home in return for a lump sum or regular payments, while retaining the right to live in the property rent-free. However, you will be responsible for the property’s maintenance and insurance. At the end of the plan, the property is sold, and the proceeds are divided according to the remaining ownership proportions.

Is Equity Release Still a Viable Option?

Recent data suggests that while the market experienced a downturn during the pandemic—with drawdowns falling by 21% and 10% fewer plans agreed in 2020 compared to 2019—conditions are improving:

Market Recovery
The rebound seen in Q4 2024, along with the annual drawdown total reaching around £2.3 billion, indicates that more homeowners are now confident in unlocking the equity tied up in their homes.

Is equity release right for you?

Equity release is a powerful financial tool, but it is not without its complexities. Before proceeding, consider the following:

• Inheritance Impact
  While accessing the equity in your home provides immediate funds, it can reduce the inheritance available to your loved ones.

• Market Value Considerations
  Equity release products often do not return the full market value of your property.

• Long-Term Costs
  With lifetime mortgages, interest compounds over time. This can significantly reduce the remaining equity in your property, potentially affecting your estate’s overall value.

• Professional Guidance
  It is crucial to speak with a specialist financial adviser who can help you understand your options and determine if equity release fits your financial goals.

We offer an initial fee-free, no-obligation consultation. Contact us for a chat so we can help you decide if equity release is the right move for your circumstances.

Key takeaways

• Market Rebound
  Recent Q4 2024 data shows a 15% increase in new equity release plans over the same period in 2023, with lifetime mortgage drawdowns for 2024 totaling around £2.3 billion.

• Expert Advice Is Essential
  Given the long-term implications on your estate and financial planning, it’s important to consult with a specialist adviser before proceeding with equity release.
  

For the latest insights and personalised advice, please contact us today. We’re here to help you navigate your equity release options confidently and securely.