Equity Release in the modern markets?

A capital markets perspective on the Equity Release Mortgage (ERM) market

In a recent discussion, Owain Chambers – Director of Capital Markets Sales, Lenvi, and Ashley Thomas – Head of Structured Finance (UK), ARC Ratings, shared their perspectives on:

• Where growth may come from in the Equity Release Mortgages market (ERM),
• How originators will need to adapt, and
• How investors view the long-term prospects of the market.

What does growth in ERM look like?

Over the past year, securitisation activity in ERMs has broadened. Historically, much of the action was private: life insurers acquiring ERM portfolios and securitising them internally for balance sheet efficiency. More recently, however, we’ve seen an increase in public securitisations, with life insurers stepping in as senior investors, while mezzanine and junior tranches attract specialist capital at more appropriate pricing.

“This shift is significant - having life insurers come in as a senior investor has created a more efficient allocation of capital and spurred the growth of public ERM securitisations in the UK.” - Ashley Thomas

Recent examples such as Slatewood’s Summerhouse 1 and Aviva’s LMF1 trades, both of which were over-subscribed, highlight the increasing openness of public markets to these deals and strength of investor appetite.

At the consumer level, origination has been mixed. According to the Equity Release Council lending peaked in 2022 at €6.2bn, falling sharply to £2.6bn in 2023 and £2.3bn in 2024, with £1.3bn originated in the first half of 2025. These fluctuations are characterised by higher borrowing costs, declining loan-to-value ratios, and the compounding effect of rolled-up interest.

Yet, over the long-term, the trend is expected to be one of steady expansion.

“If you step back and look at the last decade, the customer base has grown significantly. Even with recent fluctuations, the underlying demand drivers remain firmly in place.” - Owain Chambers

What is driving future growth in ERM?

Across the UK and Europe there is an ageing population. A growing population with significant wealth in property, even as pension provisions have weakened. For older homeowners, accessing equity without moving house is increasingly attractive.

“The economic and personal challenges faced in the UK which the later life lending space seeks to address, in terms of an ageing population and significant wealth in property, are also reflected in multiple other jurisdictions - so this environment lends itself to these jurisdictions developing the ER market in different shapes and forms that suit their own national regulatory environment.

Certainly, we’re seeing originators throughout Europe growing their lending books.” – Ashley Thomas

According to EY’s 2024/2025 Global Equity Release Survey, the global ERM market is currently worth $16.2bn annually, forecast to reach $55.2bn annually by 2035. The UK alone is set to grow from $2.9bn annual volumes to $8bn in the next decade.

While the US is a significant player in the global ERM market, the UK leads Europe in origination volumes. Other jurisdictions such as France, the Netherlands, and Spain are also exploring ways to unlock long-term, property-backed lending over the coming decade.

“The market expects growth - but to achieve it, originators will need to innovate. Consumers are driving that innovation and lenders will have to respond.” – Owain Chambers

Innovation is already taking shape in later-life lending through retirement interest-only mortgages and hybrid products designed to appeal to savers worried about passing on debt. Fiscal trends such as inheritance tax drag are also nudging families to use equity release creatively, for example, unlocking wealth to gift funds to children or grandchildren while still alive.

“Equity release doesn’t just have to be about retirees funding lifestyles. It can also support intergenerational transfers and even sustainability goals.” – Owain Chambers

ERM’s wider role in market growth?

One intriguing angle is how ERMs could complement adjacent growth areas such as green finance.

In Europe, securitisations backed by renewable assets like solar panel loans or heat pumps have drawn strong demand. If equity release can be framed as enabling sustainable home improvements or passing wealth to younger generations who prioritise sustainability, the product could align neatly with wider capital market and social trends.

“If product structures and narratives can encourage this behaviour, lenders could position equity release as not just a retirement tool, but also a solution for intergenerational and environmental goals.” – Owain Chambers

Are markets ready for ERM expansion?

Investor appetite in the ERM market is robust. For life insurers, ERMs are one of the few securitisation asset classes eligible for matching adjustment treatment under Solvency II, provided the cash flows are structured with sufficient predictability. This eligibility has been a catalyst for the growing interest and role of insurers in public trades.

At the same time, alternative asset managers are showing an appetite for mezzanine and residual positions, reflecting confidence in the asset class’s resilience and long-term returns.

However, sustaining this momentum will rely on continued borrower demand and thoughtful product evolution.

“There’s only so many ways you can take money out of a property. Innovation needs to be about why and how consumers use equity release – whether that’s supporting families onto the housing ladder, investing in home improvements, or funding sustainability initiatives.” – Owain Chambers

Concluding thoughts

“The ERM market has shaken off much of the stigma of its early days, with stronger protections under the Equity Release Council and tighter Consumer Duty standards. Today, it is increasingly viewed as a safe and scalable asset class by life insurers, pension funds, and alternative asset managers alike.” – Ashley Thomas

The challenge is not demand - both consumers and investors are showing interest. The challenge is innovation.

Growth may not be linear; interest rates and external market factors will cause peaks and troughs, but the underlying drivers are only becoming stronger. With the right structures, ERMs could become a cornerstone of European securitisation markets while providing vital financial support for ageing homeowners and their families.