Equity release lending slips to £591m as higher rates put off older borrowers
Customer numbers edged up in the third quarter, but people borrowed less against their homes, and most advisers say lenders are offering lower loan-to-value limits.
By Daily Oracles News Team2 min read
Homeowners aged 55 and over borrowed £591m against the value of their properties through equity release in the third quarter of 2026, according to figures from the Equity Release Council. That was 1% less than in the spring and 7% below the same period last year.
The fall in lending came even though slightly more people used the products. The council recorded 13,611 customers between July and September, up 1% on the previous quarter but 6% lower than a year earlier. The difference is that each borrower is taking out less.
Smaller loans
Equity release lets older homeowners release cash from their property without moving. The most common product, a lifetime mortgage, has no monthly repayments. Instead, the interest is added to the loan and the total is repaid from the sale of the home, usually after the owner dies or moves into long-term care. Because the interest compounds over many years, the rate charged makes a large difference to how much of the home's value is left at the end.
The average new lump sum fell 1% to £112,822 in the quarter. Customers taking a drawdown plan, which lets them take money in stages, took an average of £58,473 at the start, down 8%. They had a further £58,497 on average held in reserve, up 3%.
New customers rose 1% to 5,357 and returning drawdown customers, who were taking more money from plans they already had, rose 3% to 7,169. The number taking a further advance on an existing loan fell 10% to 1,085.
What advisers are seeing
The council's survey of advice firms points to the cost of borrowing as the main brake. Among advisers whose customers decided against going ahead, 80.6% said high rates were a reason and 61.1% said customers could not borrow as much as they needed. About 36% had advised customers to wait.
Two-thirds of firms said the maximum loan-to-value ratios available to their customers had fallen during the quarter. That matters because the amount a lifetime mortgage will lend depends on the borrower's age and the expected cost of rolling up interest. When rates rise, lenders cut how much they will advance on the same property.
Enquiries held up better. About 42.5% of firms reported more enquiries than in the second quarter, although 40% said they had completed fewer cases.
The outlook
Most advisers expect little change before the end of the year. Around half expect enquiries and applications to stay at current levels, while just over half expect available loan-to-value limits to fall further. In the second quarter, lending had risen to £597m from 13,489 customers.
The direction of interest rates will matter most. The Bank of England's next decision on Bank Rate, currently 3.75%, is due on 5 November, a week after the Budget.
