Equity release allows UK homeowners aged 55+ to draw cash from their property and stay put. Below is a plain-language rundown of the six trends shaping the market after the first quarter of 2025, with every fact backed by a public source.
1. Lending is climbing again
The market opened 2025 with its strongest quarter in two years: £665 million was released between January and March, 32 % more than in Q1 2024 and the fourth straight quarter of growth. (Equity Release Council, 2025)
2. Interest rates have steadied
Lowest rate available (June 2025): 5.95 % MER, fixed for life.
Average advertised lifetime-mortgage rate (Oct 2024): 6.89 %, according to Equity Release Council market data.
After the sharp rises of 2023, rates have drifted down and tightened into a narrower band, making borrowing costs easier to understand.
3. Modern plans give borrowers more control
Most new lifetime-mortgage products now allow:
| Flexibility | Typical allowance |
|---|---|
| Penalty-free voluntary repayments | Up to 40 % of the original advance each year |
| Inheritance protection | Ring-fence a chosen share of the property’s future value for beneficiaries |
| Overpayment without early-repayment charge | At least 10 % of the loan per year on Council-approved plans |
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 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) | 11–17 % |
| Consolidating unsecured debt | 10 % |
| Buying a new car or funding large purchases | 7 % |
5. Pension-surplus reforms could reshape later-life finance
On 21 May 2025 the Department for Work & Pensions confirmed proposals to let companies draw on up to £160 billion of surplus funds in defined-benefit (DB) schemes. The plan aims to free capital for investment and may encourage people to balance pension income with property wealth.
6. Retirement Interest-Only (RIO) mortgages are gaining ground
Not everyone uses equity release: 343 RIO loans were advanced in Q4 2024, up 35.6 % year on year.
A Times feature this spring illustrated why—retirees used an RIO to keep their family home when an interest-only mortgage term ended, preferring monthly interest payments to rolled-up interest.
Key take-aways for 2025
Growth phase: Lending momentum and falling rates suggest a healthier market than in 2023.
Flexibility first: Modern plan features—especially voluntary repayments—help control compound interest.
Broader uses: From clearing mortgages to funding home upgrades, equity release is becoming a main-stream retirement tool alongside pensions and RIO mortgages.
