Equity release: Quarterly trend summary (Q1 2025)

Here's a plain-language rundown of the six trends shaping the market after the first quarter of 2025.

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.

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Adam Gold

Money Expert

Adam Gold is a financial journalist writing for Clearwise.com, the site that has helped thousands of people with financial advice. Adam has been writing professionally on money and business topics for over 15 years, and has previously written for publications such as the Financial Times and the Independent.

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