More Britons Over 55 Tap Home Equity for Retirement Funds

The number of Britons accessing their home equity for retirement is on the rise, with figures from the Equity Release Council showing a 4 percent increase in equity release plans between April and June. During this period, 13,489 individuals took out new or additional equity release loans. Total lending also saw a 4 percent rise, reaching £597 million in the second quarter, up from £574 million in the preceding three months.

The strongest growth was observed among new customers, with 5,307 homeowners accessing their housing wealth for the first time, marking a 9 percent increase over the previous quarter. Despite this overall rise in activity, the average lump sum borrowed by new customers saw a 6 percent decrease, settling at £113,779. Meanwhile, initial drawdown borrowing increased by 2 percent to £63,642.

Existing customers also continued to utilize equity release. The number of customers taking further advances rose by 12 percent to 1,204, while those withdrawing funds from existing drawdown plans remained largely stable.

Equity release allows older homeowners, typically aged 55 and over, to access the wealth tied up in their properties without having to sell or move. The loans are generally repaid when the borrower dies or enters long-term care. However, the accumulating interest can make these loans expensive, particularly for those who live for an extended period, and can impact the inheritance left to beneficiaries.

Jim Boyd, chief executive of the Equity Release Council, expressed encouragement at the increase in activity, noting that new customer numbers have recovered to the previous year's levels. He highlighted that housing wealth is becoming a more integrated part of financial planning, supported by enhanced consumer protections, flexible products, and professional advice, especially as retirement funding increasingly relies on a diverse asset mix.

Lifetime mortgages constitute over 99 percent of the equity release market. These products allow homeowners aged 55 and above to secure a loan against their home while retaining ownership. If an outstanding mortgage exists, the equity release loan must first be used to clear it. Borrowers can opt for a lump sum or a drawdown facility, where funds are accessed as needed. Interest typically accrues over time and is added to the loan balance, meaning the total amount owed can increase significantly if no repayments are made during the loan term.