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Equity release customers never been better served

Equity release customers never been better served

Category: Retirement

Updated: 26/09/2016
First Published: 26/09/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Equity release has long been thought of as a way to boost retirement income without needing to downsize, and our latest research shows that those seeking such an arrangement have more choice – and better deals – than ever before.

Growing competition

The data shows that competition among equity release lenders has intensified in recent years, and has now reached a point where prospective customers have never been better served in terms of choice and interest rates.

In fact, there are now a total of 75 different lifetime mortgage equity release deals available, covering a whole range of options and loan-to-values (LTVs). This is an increase of 63% on the number of deals available a year ago, and has more than doubled in the space of three years.

Interest rates on such loans have also notably reduced, with those seeking a variable rate deal particularly well-served: the number of such deals has more than tripled from four to 14 over the last 12 months, offering plenty of choice no matter which route you choose to go down. The table below highlights the improving market in more detail:

Sep-15 Sep-16
Average lifetime equity release fixed rate (based on rate not APR) 6.42% 6.12% 5.66%
Number of lifetime equity release deals 29 46 75
Source: Moneyfacts.co.uk Compiled 26/09/2016

There's also been a growing trend of equity release lenders offering higher LTVs, 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). This is compared with just a fifth of deals five years ago, pointed out Richard Eagling, editor of Investment Life & Pensions Moneyfacts, highlighting the change in direction for the sector.

"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," said Richard.

"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%.

"Key to all this has been intensifying competition. With several new providers having already entered the sector, and others preparing to enter, it's worthwhile for prospective applicants to consider their options."

What next?

Considering equity release? Why not see if you can take advantage of things by contacting our no obligation equity release planning service

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.