1. Market lending powers ahead
The Equity Release Council reports that £665 million has been unlocked between January and March 2025, 32 % more than Q1 2024 and the fourth straight quarter of growth. (Equity Release Council, 2025)
2. Interest rates: from roller-coaster to plateau
| Indicator | Latest figure |
|---|---|
| Lowest lifetime-mortgage rate | 5.95 % MER, fixed for life |
| Typical advertised rate (most products) | ≈ 6.3–6.9 % APR |
After rocketing above 7% in 2023, rates have settled into the mid-6% range, making costs easier to forecast.
3. Plans are far more flexible
Most new lifetime-mortgage products now allow:
| Feature | Typical allowance |
|---|---|
| Penalty-free voluntary repayments | Up to 40 % of the original loan per year |
| Inheritance protection | Ring-fence a chosen % of future property value |
| Overpayment without early-repayment charge | At least 10 % of the balance |
The Council’s new “Standards 2.0”, launched in May 2025, formalising these consumer safeguards across the industry.
4. Why people release cash
Latest consumer research highlights five key reasons why people choose to release equity from their homes:
| Reason | Share of customers |
|---|---|
| Home improvements (extensions, accessibility upgrades) | 28 % |
| Repaying an existing residential mortgage | 24–26 % |
| Gifting money to family (house deposits, weddings) | 7 % |
5. Rules & pensions backdrop
Equity Release Council “Standards 2.0” consultation — launched 6 Mar 2025, aims to hard-wire consumer-friendly product features.
Defined-benefit pension surplus reform — the government’s ongoing consultation (opened Mar 2024) could let firms draw on up to £160 billion of DB surpluses, nudging retirees to balance pensions with housing wealth.
6. Retirement Interest-Only (RIO) mortgages gain traction
A niche but growing alternative: 343 RIO mortgages were advanced in Q4 2024, up 35.6 % year-on-year. Case studies in The Times show retirees using RIOs to keep family homes without the roll-up interest of equity release.
Key take-aways for Q1 2025
Volume up, confidence up – four consecutive quarters of lending growth signal a market rebound.
Costs stabilising – sub 6% headline rates are back, narrowing the gap with mainstream mortgages.
Consumer safeguards improving – voluntary repayments and inheritance protection are fast becoming the norm.
Diverse motivations – from remortgaging to funding renovations and family support, equity release is now a multi-purpose retirement tool.
Watch the policy pipeline – new ERC standards and pension-fund reforms could further shape later-life borrowing choices in 2025.
