Equity release market offers more choice than ever
Equity release customers have never been better served, according to Moneyfacts, with a total of 75 different lifetime mortgage deals now available, covering a wide spread of options and loan-to-value ratios (LTVs).
The financial information provider said competition amongst equity release lenders has intensified in recent years so that customers now have a wide choice of deals and interest rates.
The number of deals alone has risen by 63% since this time last year and, at 75, is more than double the total number three years ago.
A notable trend has been the increase in the number of equity release variable rate deals available, which has more than tripled from four to 14 over the last 12 months. This has been driven by the arrival of OneFamily into the equity release market with its range of lifetime mortgages, including variable rates linked to the Consumer Prices Index.
Rates have also dropped, from an average of 6.42% three years ago to 5.66% today.
Richard Eagling, editor at Investment Life & Pensions Moneyfacts, said: “It’s clear to see that the equity release sector is responding to the greater demand from elderly homeowners looking to unlock cash from their homes by offering a more diverse range of products and options.
“The growing trend of offering higher LTVs has continued with well over half (57%) of current lifetime mortgage deals offering LTVs at 50% or above (depending on the customer’s age and/or health), compared with just a fifth of deals five years ago.
“A spate of interest rate reductions has made the idea of utilising equity release even more attractive since the Bank of England cut base rate to 0.25%. Since the start of August the average interest rate on a fixed lifetime mortgage has fallen from 6.15% to an all-time low of 5.66%, with some fixed rates falling below 4.00%.”