The number of equity release product options has more than doubled in two years from 58 to 139, according to the Equity Release Council.

And the sector has moved a long way from the 24 products available in 2007, said the trade body.

Today’s equity release products also offer greater flexibility, with four in five (80%) product options offering the choice to make ad-hoc, penalty-free voluntary or partial repayments of their loan, up from 68% a year ago, while lifetime mortgages now include the option to ringfence equity. This means homeowners can retain some of the value of their property as a guaranteed minimum inheritance.

Lower costs

The rise in competition has also driven down pricing on equity release. The average interest rate for equity release products was 5.22% as of July 2018, down from 5.27% in July 2017 and from 5.96% a year earlier, said the Equity Release Council.

A total of 38,912 households aged 55 and over used equity release products to unlock housing wealth in the first half of 2018. This included 21,490 new plans agreed, up by 28% from 16,805 a year earlier. A further 15,709 returning drawdown customers made withdrawals from their agreed reserve funds between January and June, up 25% year-on-year.

David Burrowes, chairman of the Equity Release Council, said: “As customers navigate their way through a growing range of product choices – including retirement interest-only mortgages – the appropriate advice, guidance and support is needed to weigh up the various benefits, costs, flexibilities and protections to ensure they are suitable to meet both current and future needs.”