Why Equity Release Shifts Towards Mortgage Repayment Among Older Homeowners?
Equity release is increasingly being used less as a retirement “top-up” and more as a form of debt refinancing for older homeowners.
Key Group says analysis of more than 1,000 customer cases agreed between Q2 2024 and Q1 2025 (data to 31 March 2025) shows mortgage repayment becoming the dominant driver of new plans Over the period, the share of new plans used primarily to repay an existing mortgage rose from 36% in Q2 2024 to 63% in Q1 2025.
The same customer case data shows a pullback in more discretionary uses. Home improvements fell from 14% to 5% as a primary purpose, property purchases dropped from 7.9% to under 2%, and vehicle purchases slipped from 7.7% to 3.9%.
Meanwhile, “other debts” increased from 2.7% in 2024 to 9.1% in Q1 2025, suggesting borrowers are prioritising liability consolidation over discretionary spending.
There are still signs of discretionary “life spending”, but it is clearly secondary to debt management.. Holidays rose as a primary purpose from 3.2% to 7.6%, and gifting moved around quarter to quarter (5.6% in Q3 2024, 12.4% in Q4 2024, and 9.1% in Q1 2025).
What Do Borrowing Patterns Reveal About How Older Homeowners Are Using Equity Release?
The scale of borrowing is most pronounced in London.. Key’s data puts the average release for London customers at £145,471 per plan in 2025, up £27,462 year-on-year and more than double the regional UK average, reflecting higher property values and mortgage balances in the capital.
Equity release is arranged via a lifetime mortgage: a loan secured against the home, with interest added to the balance and repaid when the last borrower dies or moves into long-term care.
Many modern plans allow voluntary repayments or staged drawdown, but Key’s figures suggest borrowers are taking a larger initial amount and holding back less for later access. The Equity Release Council’s standards set out safeguards, including the no negative equity guarantee.
Borrowing patterns also suggest a more front-loaded approach.. The average initial release rose 13.3% year-on-year to £62,930, while the average total facility (initial plus any agreed drawdown facility) fell to a four-year low of £78,942. The average drawdown facility set up dropped from £37,744 in 2024 to £16,012 in 2025, a 57.6% decrease.
Most customers were not using equity release for just one reason. Around a third (31.6%) used their plan for a single purpose, 32.7% split funds across two purposes, 21.6% across three, and 9.5% allocated funds to four or more priorities. That pattern points to financial rebalancing rather than single-goal spending.
What Does the Latest Market Data Mean for Future Equity Release Planning?
Broader market data support the trend. The Equity Release Council’s quarterly report shows total lending reached £636m in Q2 2025, up 10% year-on-year.
Equity release remains a regulated product with long-term implications.. The FCA has called for improvements to advice and financial promotions in later-life mortgages, and MoneyHelper recommends using an FCA-authorised adviser and understanding how lifetime mortgage costs build up.
Rachel East, Senior Director of Later Life Advice at Key Equity Release, said: “Homeowners appear to be taking a pragmatic, two-part approach: using equity release first to secure essentials and ease immediate financial strain, while still setting aside modest sums for holidays, family gifts and other quality-of-life spending. It’s a shift from optional projects toward careful prioritisation”.
