Equity release lending fell 7% year-on-year in the third quarter, despite a small increase in customer activity, as higher borrowing costs and tighter loan-to-value limits continued to drag the market, according to the Equity Release Council.

The latest figures from the trade body found that total lending reached £591m in Q3 2026, down 1% on the previous quarter and 7% compared with the same period last year.

Overall customer numbers rose 1% quarter on quarter to 13,611, while new plans increased 1% to 5,357. However, new customer numbers were 3% lower than a year earlier.

Returning drawdown customers increased 3% over the quarter to 7,169, while further advance customers fell 10% to 1,085. Overall customer numbers were down 6% year on year, with returning drawdown activity falling 7%.

Average new lump sum borrowing declined 1% over the quarter to £112,822, while average initial drawdown borrowing fell 8% to £58,473. Average drawdown reserve facilities, which allow customers to access funds in the future, rose 3% to £58,497, suggesting borrowers continue to prioritise flexibility over taking larger sums upfront.

John Godfrey, chair of the Equity Release Council, said: “The latest figures show a market that is demonstrating resilience, with some areas of activity moving in the right direction despite the wider pressures on household finances. It is encouraging to see new customer numbers and returning drawdown activity increase over the quarter, although overall lending remains below the levels recorded a year ago.”

The council’s adviser survey showed the difficulties in converting customer interest into completed business. While 42.5% of firms reported an increase in enquiries compared with Q2, case completions remained under pressure, with 40% reporting a decline. Two-thirds (66.7%) also said available loan-to-value ratios had fallen.

Borrowing costs were a significant barrier to customers proceeding with equity release. Among advisers whose customers decided against taking out a plan during the quarter, 80.6% cited interest rates that were too high, while 61.1% said customers could not secure the loan-to-value they needed. A further 36.1% said they had advised customers to wait.

Looking ahead, 45.9% of advisers expect enquiries to remain unchanged in Q4, while 51.4% anticipate applications holding steady. However, 29.7% expect case completions to decline, and 51.4% predict further reductions in available loan-to-value ratios.

Jim Boyd, CEO of the Equity Release Council, said: “The adviser survey reinforces the picture of a market where demand remains, but in an economically challenging environment converting interest into completed business is proving more difficult. Borrowing costs and loan-to-value constraints continue to affect customers’ decisions, while some are choosing to wait rather than proceed immediately.”

Commenting on the figures, Simon Webb, managing director of capital markets and finance at LiveMore, said: “With many firms reporting an increase in enquiries and applications, this reveals a promising potential for brokers and lenders. Holistic advice that considers broader concerns over wealth, retirement and mortgage planning is more vital than ever. Consumer need is clearly not going away and we need to match those needs with the options that are right for them, including a broad range of later life lending products.

Will Hale, CEO of later life lending platform Air, argued that the market remained well below its potential, with many older borrowers not considering the full range of options available to them. He said: “A different perspective around advising on the use of property wealth and the application of specialist later life lending products, such as modern lifetime mortgages, could see benefits to a customer’s retirement income or even open-up efficient ways to facilitate intergenerational wealth transfer plans."

Dave Harris, chief executive of specialist over-55s mortgage lender more2life, added: “While these figures underline the market’s resilience, they also only serve to strengthen our call for the FCA to make later life lending conversations mandatory for every client aged 55 and over.

“Millions of homeowners are asset-rich but cash-poor, yet too many advisers still aren’t talking to their clients about putting the equity in their home to work. As a result, many who could benefit from unlocking their property wealth miss out."

---