Derin Clark

Derin Clark

Online Reporter
Published: 11/06/2019

The average equity release mortgage rate has dropped below 5% for the first time in the last 12 years, according to data from Moneyfacts.co.uk.

Current equity release mortgage rates are now at the lowest they have been since Moneyfacts.co.uk digital data began in 2007, with the average rate for fixed and variable rate mortgages now at 4.99%. This is down from 5.10% a year ago and 6.11% five years ago. The choice of products on the market has also increased and there are now 207 lifetime equity release deals available, up from 164 a year ago and just 48 five years ago.

Equity release market analysis

Lifetime equity release deals Jun 2014 Jun 2017 Jun 2018 Jun 2019
Number of deals overall 48 100 164 207
Average rate overall (fixed and variable) 6.11% 5.22% 5.10% 4.99%
% of deals with a product fee 96% 78% 57% 66%

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “The equity release market has evolved considerably over the years, with choice increasing and rates reducing as a result – the market has become much more accommodating to prospective borrowers. The average equity release rate for fixed and variable rate mortgages has dropped to below 5% for the first time on record and there are now more than 200 deals available to choose from.

“While rate alone should not be the deciding factor when choosing a lifetime mortgage, it is still a positive indicator that competition is rife in the market. The whole package of an equity release deal must be weighed up, especially any fees included. As 66% of the market charges a product fee, borrowers need to be wary of the upfront cost of any deal.

“Flexibility with drawing funds is also a key point to consider, as shown in the Equity Release Council’s Spring 2019 report, drawdown is more popular with borrowers than taking a lump sum, with two-thirds (64%) of new customers opting for a drawdown lifetime mortgage in the second half of 2018. By choosing a drawdown product, consumers could potentially save interest compared to taking a lump sum.

“The reasons why borrowers choose an equity release deal can vary. Whether it be to fund any gap for later life care costs, to reduce the blow of an Inheritance Tax bill, or just to make retirement more comfortable, it is vital consumers get independent financial advice to ensure it is right for them.”

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.

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