Beyond the Numbers – Understanding the ERC’s Latest Market Update

The recently issued Q1 2026 figures from the Equity Release Council (ERC) show total lending of £574m, down 9% on the previous quarter and 14% year-on-year. While this reflects a slowdown in activity, it comes during a period of heightened economic uncertainty, which is influencing borrowing behaviour across the wider mortgage market.

Demand Remains Firm Beneath the Surface

Despite lower lending and fewer completions, customer interest in equity release remains strong. Nearly half (45%) of firms reported an increase in enquiries, with 38% also seeing a rise in applications. This suggests that demand has not disappeared, it is simply taking longer to convert.

The ‘Delay Effect’ in Action

A key theme emerging from the data is delayed decision-making. Customers are continuing to explore their options but are more cautious about proceeding, likely due to interest rates, affordability considerations, and wider economic pressures. As a result, fewer cases are reaching completion in the current environment.

Shifts in Borrowing Behaviour

Average loan sizes have declined across most product types, reflecting a more measured approach from customers. At the same time, the increase in drawdown reserve facilities highlights a preference for flexibility – allowing borrowers to access funds when needed while limiting immediate borrowing.

A Pipeline Building for Recovery

Encouragingly, adviser sentiment points to a potential rebound. Around 46% of firms expect enquiries to increase in Q2, and 50% anticipate a rise in applications. This indicates a strengthening pipeline that could translate into higher lending as conditions stabilise.

Long-Term Drivers Still Intact

Beyond short-term fluctuations, the fundamentals of the equity release market remain strong. An ageing population, growing retirement income gaps, and significant housing wealth continue to support long-term demand for later-life lending solutions.

Looking Ahead

The Q1 2026 data does not necessarily signal a shrinking market, but rather one adjusting to external pressures. With demand still present and activity building behind the scenes, the sector appears well-positioned for recovery as confidence returns.

In many ways, this is not a slowdown, rather a pause before the next phase of growth.