Rise in the cost of equity release mortgages
Rises in wider interest rates have started to impact the later life lending market, with costs of borrowing on the up.
Over half of the 11 lenders in the lifetime mortgage market have increased interest rates within their range in the last quarter, according to Moneyfacts.
The financial information provider found that the average lifetime mortgage rate has jumped from a low of 5.03% in July to 5.10% in November.
Fewer deals available
The number of deals on offer has reduced from 157 to 128 over the same time period.
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The equity release market has listened to the consumer demand for more flexibility, and, as a result, lifetime mortgages are becoming more popular, so much so, that record amounts are being unlocked through equity release.
“This year has also seen an influx of competitive rates, with the average lifetime mortgage recording its lowest ever level in July (5.03%). However, lenders are now starting to factor in interest rate rises, with six out of 11 providers upping their rates over the last quarter, some more than once, meaning the average rate now stands at 5.10%. In fact, the average rate for mortgages ranging up to 50% loan-to-value has risen from 4.67% to 4.83% over the same period.
“Whilst consumers need to seek advice from an independent financial adviser that specialises in equity release, it can be beneficial to find one who also advises on mortgages, so they can work out the best point of action by going through all the latest options to hit the market – including retirement interest-only mortgages, for example.”