Total lending fell to £574 million in the first quarter of 2026, down 9% from the previous quarter (£632 million) and 14% year-on-year (£655 million), the Equity Release Council (ERC) reveals.
The first quarter market report showed that customer numbers also fell, with 12,958 new and returning customers gaining access to home equity, down 7% quarter-on-quarter and 10% year-on-year.
ERC says feedback from advisors shows underlying demand is resilient despite the credit slowdown. Nearly half (45%) of companies reported an increase in inquiries compared to the previous quarter, while only a third (33%) reported a decrease.
Applications also rose for many companies, with 38% reporting an increase for the quarter, compared to 34% reporting a decrease.
While customer inquiries and requests have persisted, fewer cases are being completed in the current environment.
Meanwhile, Q1 2026 market figures showed new subscription volumes fell 8% during the quarter to 4,868, while returning customers with a withdrawal saw a more modest 2% decline to 7,019.
Further progress activities recorded the biggest move, falling 27% to 1,071 over the quarter.
Average loan sizes declined across most product types, reflecting a more cautious lending environment.
New lump sum loans fell 2% over the quarter and 5% year-on-year to £121,196, while initial drawdowns fell 8% over the quarter and 10% year-on-year to £62,633.
In contrast, average withdrawal reserve facilities rose 6% to £61,307 this quarter.
Looking ahead, sentiment among advisors suggests that activity is expected to improve. More than two in five companies (46%) expect applications to increase in the second quarter of 2026, while 50% expect applications to increase, indicating that the pipeline is strengthening in parts of the market as the current uncertainty begins to subside.
This is despite the fact that only one in five companies (20%) expect the number of applications to decrease in the second quarter, while the same number expect the number of applications to decrease.
ERC chairman David Burrowes said: “It is disappointing to see activity decline in the first quarter, especially given the significant increase in inquiries. But as in other parts of the mortgage market, it is clear that the uncertainty dominating the UK and global economies, driven by the conflict in Iran, is contributing to higher interest rates and borrowing costs – while tighter loan availability is further slowing consumer decision-making, delaying completion.”
“What we’re seeing is not a lack of demand – applications are increasing – but a slowdown in business coming in. Advisors are reporting strong interest, but clients are taking more time and, in some cases, pausing decisions altogether.”
“We may well be heading for a rebound as conditions stabilize and deferred cases begin to unwind. Over the longer term, the underlying drivers of demand remain in place and housing wealth continues to play an important role in supporting financial resilience in later life.”
Jim Boyd, CEO of ERC, added: “Broker forecasts point to a strengthening pipeline, with advisor feedback suggesting demand is being deferred rather than dissipating. As uncertainty begins to subside, we expect more of this activity to continue, supporting a recovery in the coming months.”
“Equity release will inevitably become a mainstream part of retirement planning as advice and products become less isolated and the inadequacy of pension funding increases. Nearly four in ten (38%) of future retirees are on course to fall below Pensions UK’s ‘minimum standard’.”
“As demographic and economic pressures increase, demand is likely to grow, supported by product changes that make the secure yet flexible financing options offered by modern equity release products increasingly attractive to consumers.”