Average cost of equity release mortgages rises
The cost of lifetime mortgages is on the rise and the number of deals has fallen, according to Moneyfacts.
The financial information provider said some lenders have started to consolidate their options as a result of the coronavirus crisis.
Two-thirds of lifetime mortgage lenders increased the cost of their deals in April, showing clear signs that the market is moving away from the rate cut competition seen just a few months before, when rates fell to a record low.
The average equity release rate for fixed and variable deals stands at 4.34%, up from 4.23% a month ago and 4.20% in March, the lowest ever recorded rate.
The number of deals on the market has also fallen in the last month, by 66, to 357.
However, there are still more lifetime mortgage deals on offer than a year ago, when there were 198 options and the average rate stood at 5.00%.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “At first glance, a drop in the number of equity release deals month-on-month may seem concerning, but it is worth pointing out that most lenders in the lifetime mortgage market are still offering an abundance of choice.
“If more lenders consolidate their range though, then this could be more of a sign of restructuring their options to a target market.
“If borrowers are still sitting on the fence on whether to take out a lifetime mortgage, then they would be wise to set up a phone call or video call with their financial adviser to go through their options during the lockdown if they have the time to spare. However, it is also important to discuss the implications with their family on how such an arrangement can impact their inheritance.”