UK Economy Grows 0.6% in Q1 2026: What Resilient Property Values Mean for Equity Release

What the Q1 2026 GDP figures tell us

According to the Office for National Statistics, the UK economy grew by 0.6% in the first quarter of 2026 — the January to March period. That represents 1.1% growth year-on-year. The services sector led the expansion, with consumer spending holding up better than many economists had anticipated given the backdrop of elevated interest rates and global uncertainty.

The figures beat analyst forecasts, which had expected something closer to 0.3–0.4% quarterly growth. The outperformance is meaningful — it suggests the UK economy is more resilient than pessimistic scenarios had priced in, despite headwinds from the Iran conflict, oil price volatility, and the lingering effects of elevated borrowing costs.

For homeowners, the relevance is direct. A growing economy supports employment, consumer confidence, and — over time — property demand. It reduces the risk of a sharp correction in house prices. And it provides a more stable backdrop for making long-term financial decisions like equity release.

The property market: resilient despite near-term softness

The UK property market is, as industry commentators have put it, "remaining resilient" despite geopolitical headwinds. Average UK house prices remain above £280,000. While transaction volumes have slowed and near-term RICS sentiment is cautious (net balance of -43% on price expectations), the medium-term forecasts from Capital Economics and Savills point upward:

• 1.5% house price growth forecast for 2026
• 3% forecast for 2027
• 4% forecast for 2028

This is a market that is pausing, not collapsing. For homeowners with significant equity accumulated over decades of ownership, the underlying asset remains valuable and is expected to appreciate modestly over the years ahead.

How this affects equity release calculations

Equity release is assessed on the basis of your property's current valuation, your age, and in some cases your health. The direction of the market in the short term matters far less than the current value of your home and the amount of equity you have accumulated.

In a stable or slowly growing market, acting sooner rather than later carries a logic: property values are holding up, you are not selling into a depressed market, and your equity is intact. If you wait for conditions to improve materially, you may find that modest property price rises are offset by the continuing rollup of interest on a future plan — or that the need you are trying to address has grown more urgent in the meantime.

The equity release market itself grew 11% in 2025, to £2.57 billion in total lending. That growth reflects real demand from homeowners who recognise that their property wealth is a legitimate resource to draw on — particularly when pension income falls short of the retirement they planned.

The protection that the market cannot take away

Whatever the economic environment does, Equity Release Council standards require all approved lifetime mortgage products to include a no-negative-equity guarantee. This means that you — or your estate — can never owe more than the value of the property when it is eventually sold, regardless of what happens to house prices in the future.

Combined with FCA-regulated advice and independent legal representation, this guarantee means that the risks associated with a potential downturn in property values are substantially mitigated for equity release borrowers. The Bank of England base rate is expected to settle between 3.25% and 3.50% by mid-2026, which may also offer scope for equity release rates to improve as the year progresses.