Customer numbers also dropped over the same period, with 12,958 new and returning customers accessing housing wealth – representing a 7% decline on the previous quarter and a 10% decline annually.

Here, we explain how equity release works and the pros and cons to consider.

How does equity release work?

Most people taking out equity release will opt for a lifetime mortgage. This involves taking out a loan against your property, which is repaid from the proceeds when it’s sold.

The amount you can borrow depends on your age and how much your home is worth. You’ll need to be at least 55, but the older you are, the more you can borrow.

Exactly how much you can borrow will vary from provider to provider. Currently, at age 65, you’ll typically be able to borrow a maximum of between 35% and 39% of the market value of your home, rising to between 40% and 44% at age 70.

You can opt to take a lump sum – where interest is charged on the whole amount at a fixed rate – or take chunks of cash when you need it, only paying interest on the money you’ve taken.

By spreading out the amount you borrow in this way (known as ‘drawdown’), you’ll reduce the impact of compound interest.

Find out more: equity release explained.

Why has the market been subdued?

The equity release market has been flat for a couple of years amid a fairly stagnant housing sector. Fluctuations in property prices have meant that older homeowners have been more reluctant to release equity.

More recently, global uncertainty has led customers to take a more cautious approach to financial decision making.

David Burrowes, chair of the Equity Release Council, said: ‘Like other parts of the mortgage market, it’s clear the uncertainty dominating the UK and global economies, driven by the conflict in Iran, is contributing to higher interest rates and borrowing costs.’

He added: ‘Advisers are reporting strong levels of interest, but customers are taking more time and, in some cases, pausing decisions altogether.’

More than two in five advice firms expect enquiries to increase in the second quarter of 2026, while half expect applications to rise as current uncertainty may begin to ease.

Should you use equity release?

Equity release can prove useful if you have value tied up in your property, but are worried about having enough to live on in retirement.

It’s not right for everyone, though. Here are the pros and cons to consider:

Pros

You can use the tax-free cash however you wish, whether that’s for home improvements or helping out relatives.
You’ll be able to stay in your home for the rest of your life or until you move into care, so you won’t face the potential hassle of having to move.
There’s no obligation to make any repayments, although some products allow you to do so.
The ‘no negative equity guarantee’ means that you will never owe more than the value of your property when it’s sold.
It’s a way of potentially cutting inheritance tax by freeing up cash to give to loved ones now. But inheritance tax might still apply if you die within seven years of gifting money.

Cons

Not making any repayments on your loan will mean you end up paying far more than you’ve borrowed, due to the compounding of interest. This could mean the value of your property is wiped out entirely.
Changing your mind can prove costly as repaying your loan early often triggers an early repayment charge.
Using equity release will often reduce the size of your estate and the amount you’ll be able to leave behind for loved ones, as the lender is repaid before the rest is divided among beneficiaries.
Equity release can impact any means-tested benefits you’re entitled to.
If you decide to move, your provider might not let you transfer your mortgage if your new property doesn’t meet its criteria. For example, it might not accept sheltered housing.

What are the alternatives to equity release?

If you decide that equity release isn’t for you, there are some alternatives:

Downsizing: our investigation found that you can potentially unlock hundreds of thousands of pounds by moving to a smaller property, even after paying stamp duty.
Remortgaging: increasing numbers of lenders offer retirement interest-only mortgages (RIOs). These allow you to pay off the interest on the loan each month, and the original value of what you borrowed is repaid when you die or move out.
A personal loan or credit card: for smaller amounts, borrowing via an unsecured personal loan or interest-free purchase credit card could be much cheaper than equity release, as long as you can keep up with repayments.

Seek professional advice

Borrowers must take professional advice before releasing equity from their home, and it’s important to choose an adviser who specialises in this area. Advisers should hold one of the following qualifications:

CeRER (Certificate in Regulated Equity Release) – awarded by the Institute of Financial Services (IFS).
CER (Certificate in Equity Release) – awarded by the Chartered Insurance Institute (CII).
ERMAPC (Equity Release Mortgage Advice & Practice Certificate) – awarded by the Chartered Institute of Bankers in Scotland. The ERMAPC was discontinued a few years ago but may still be held by some advisers.

You can search for qualified advisers through the Society of Later Life Advisers. The Equity Release Council also has a member directory.

Source link