The Intermediary – December 2025 - Flipbook - Page 32
A YEAR IN REVIEW
Feature
D RISKS:
OPPORTUNITIES AND
LATER LIFE IN 2025
d CEO
Mark Gregory is founder and
at Equity Release Group
Despite a challenging market and ongoing
rate volatility, the later life lending sector has continued
to grow in 2025. Much of this momentum is driven
by homeowners needing greater flexibility and broader
financial options at retirement.
For many, their pension and savings income alone is no
longer enough to meet the minimum, or desired standard
of living. As a result, retirees are increasingly turning to
wealth tied up in their homes, with equity release playing a
more significant role in retirement planning, and steadily
evolving into a mainstream financial tool.
We’ve seen borrower motivations shifting notably towards
debt consolidation and income supplementation, reflecting
the widening gap between retirement expectations and
financial reality.
Advisers are reporting a rise in ‘needs based’ cases,
fuelled by sustained cost-of-living pressures and uncertainty
over whether pensions and savings will be sufficient.
There is also growing evidence that more people will
enter retirement with outstanding mortgage debt, due to
the rise of longer mortgage terms.
At the same time, lenders have enhanced product
flexibility, with voluntary repayment features and a
significant move towards interest servicing options
providing advisers with more opportunities to tailor
solutions to clients’ evolving needs.
Economic impacts
During the second half of the year, interest rate stability
restored confidence, leading to more enquiries and a
gradual return of previously deferred cases.
Rising inflation continued to erode the spending power
of retirees this year, particularly those reliant on fixed
incomes from pensions and savings.
potential component of retirement planning.
An evolving regulatory focus on Consumer Duty has
also strengthened suitability conversations, placing greater
emphasis on advice quality, vulnerability support, and
evidencing good outcomes.
Opportunities and risks
Opportunity: With high rates and volatility at the start of
2025, we’ve seen that homeowners have been holding off
until rate conditions improve.
As interest rates begin to soften, 2026 could unlock a
significant wave of pent-up demand from those waiting
for more favourable conditions to make the most of
their opportunities.
Opportunity: Demographic trends are expected to broaden
the market in 2026, with more homeowners reaching
retirement while still carrying mortgage commitments
and debt, increasing the need for equity release
where appropriate.
With more people entering later life with outstanding
mortgage balances, fixed or reduced retirement incomes are
making it harder for them to manage ongoing monetary
demands, subsequently creating a need to explore all
suitable and affordable options.
At the same time, longer life expectancy and the shift
away from defined benefit pensions mean that many
retirees will need their financial resources to support
them for longer.
As a result, more customers may consider using their
property wealth alongside pensions and savings.
These drivers highlight a growing need for quality
advice, transparency, robust financial assessments, and
personalised support to ensure customers understand their
choices and can achieve good outcomes.
Everyday essentials such as energy bills, food, insurance,
and other services continued to rise, or cost more than
retirees’ income sources could cover. As a result, a growing
number of older homeowners turned to equity in their
home to help bridge the gap.
Additionally, inflationary pressures increased the cost of
unsecured credit, making housing wealth – often people’s
largest and most stable asset – a more attractive and reliable
source of funds.
In short, inflation squeezed fixed incomes, widened
the gap between income and essential spending, and
accelerated the shift towards using property wealth as a
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The Intermediary | December 2025
Risk: Economic uncertainty could potentially lead to
borrowers being cautious, and prolonged rate volatility or
stagnant house prices could inhibit activity.
When consumers are unsure about the wider economic
outlook, they may delay decisions involving long-term
borrowing or the use of their housing wealth.
If rates remain volatile, products may feel less affordable
or harder for advisers to recommend as suitable.
Similarly, if house price growth slows or stalls, customers
may have reduced equity available to them, which will
therefore in some cases limit the amount they can borrow.
