What Advisers Should Know About The State of the Equity Release Market Heading into 2026

As we move into 2026, the equity release market continues to look and feel very different to the “boom and bust” cycles many advisers remember. The latest Equity Release Council (ERC) figures point to a sector that is mature, advice-led and increasingly needs-driven. Fewer customers proceeding at any one time, but those who do are typically releasing more and doing so with clearer intent.

At the same time, the wider backdrop is shifting. Bank Rate has fallen to 3.75% (December 2025), and mainstream house price forecasts for 2026 are modestly positive, both factors that can influence sentiment, affordability calculations and product design across later life lending.

Steady Lending, Selective Demand

2025 started and progressed with consistent lending volumes but changing customer behaviour. In the first quarter of the year, customers accessed £665m of housing equity, up 32% year-on-year, and the market recorded its fourth successive quarter of growth at that point.

In Q2 2025, total lending was £636m (a 10% year-on-year increase), with 14,404 total plans across new and returning customers. However, by Q3 2025, total lending had edged up again to £639m, up 4% year-on-year, while total plans fell to 13,158.

In other words: broad lending remained resilient even as overall plan numbers softened, because average amounts released increased across several product types.

Clients who proceed are often doing so because the release solves a real planning issue (clearing a mortgage, managing debt, supporting family, or funding later-life needs), rather than discretionary spending.

The Key Adviser Takeaway

One of the clearest patterns in 2025 data is that average borrowing has risen in several categories:

• In Q1 2025, average new lump sum borrowing rose to £127,414 (up 23% year-on-year).
• In Q3 2025, average new initial drawdown increased to £83,906 (up 20% year-on-year) and the average drawdown reserve to £71,044 (up 43% year-on-year).

Just as importantly, product preference is shifting. In Q3 2025, lump sum business became the majority again (51% lump sum vs 49% drawdown). This is the first time a lump sum has been the preferred choice since Q4 2022, according to the ERC report commentary.

What it Means For Advice in 2026

We expect advisers to see more “purpose-led” cases where clients want to:

• Repay a residential mortgage going into retirement (or restructure debt that has become uncomfortable).
• Create liquidity without selling investments at an inopportune time.
• Provide living inheritance support where affordability pressures persist for younger family members.
• Fund home adaptations and care-related planning.

Practical Opportunities for Advisers: Where Pipeline is Likely To Come From in 2026

Based on the 2025 lending pattern (stable totals, higher averages, shifting product mix), three opportunity areas stand out:

• More clients are reaching the point where their residential mortgage no longer fits their retirement timeline. Equity release is not automatically the answer, but a later life review should be. Q3 commentary notes many customers proceeding are prioritising clearing mortgages or managing debt within long-term plans.
• For clients with significant property wealth but constrained liquid assets, property can be used strategically to avoid forcing asset sales at the wrong time, but only where the client understands long-term compounding and estate impact.
• Higher average releases and continued demand point to ongoing family support use cases, but these need careful suitability work (especially where gifting is involved and future care needs are uncertain).

Closing Thought: a Stable Market, but an Advice-First Year

The equity release market heading into 2026 looks resilient rather than rapid. Lending has held up across 2025 quarters, average releases have risen, and client behaviour appears increasingly considered and needs-led.

With the FCA signalling a stronger focus on later life lending and the industry putting additional weight on vulnerability support, 2026 is shaping up to be a year where great advice becomes an even clearer differentiator.

At Key Partnerships, we work alongside advisers to help you navigate equity release and the wider later life lending market with confidence, from case triage and product selection to compliance-focused support and ongoing education.