Equity release providers cut rates and number of deals
Five out of nine equity release lenders have cut or launched new rates in July, as providers attempt to adjust to new market conditions.
Analysis from Moneyfacts found the majority of providers were repositioning their lifetime mortgage ranges to adapt to the Covid-19 market.
But despite the recent spate of new deals launched, since the start of June 90 deals have been withdrawn from the market.
There are currently 355 lifetime mortgage deals available to the over-55s, a 60 per cent increase on the number of deals available in July 2019. Compared to June, however, there has been a 20 per drop from 445 deals.
Average rates have slightly decreased month-on-month from 4.27 per cent in June, to 4.26 per cent this month and are 0.63 basis points lower than July 2019 when the average rate was 4.89 per cent.
A recent market study by Key found that the habits of consumers had also changed compared to this time last year.
Key reported 44 per cent of over-55s had turned to equity release to reduce debt, a rise of seven per cent versus H1 2019. Meanwhile those looking to use the cash for a holiday or home improvements fell to four per cent and 14 per cent respectively.
Rachel Springall, spokeswoman at Moneyfacts, said: “Clearly these are challenging times for the personal finance industry and consumers debating whether an equity release deal is right for them may be deterred from making any changes to their finances, particularly since the start of 2020.”
She added: “This changing landscape could be a sign of providers adjusting to challenges faced during the first half of 2020, and there is hope that the situation will improve as the UK eases out of lockdown.”