Equity release rates starting to rise | moneyfacts.co.uk
MONEYFACTS ARCHIVE. This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.


Lieke Braadbaart

Online Writer
Published: 06/11/2018

As the equity release market continues to evolve alongside people's need for extra cash when they approach or are in retirement, it has not been totally immune from the rate rises that the residential mortgage market has witnessed of late. While earlier this year saw record-low rates, the average has since gone up.

Lifetime mortgage rates in particular have seen an increase, with over half of the 11 lenders currently operating in this market raising their rates over the last quarter. "This year has seen an influx of competitive rates, with the average lifetime mortgage recording its lowest ever level in July (5.03%)," said Rachel Springall, finance expert at Moneyfacts.co.uk. "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%."

Nov-13 Nov-17 Jul-18 Nov-18
Average lifetime equity release rate (based on rate not APR; fixed and variable) 6.11% 5.16% 5.03% 5.10%
Number of deals (fixed and variable) 37 121 157 128
Source: Moneyfacts.co.uk

As lifetime mortgages are the most popular equity release option by far, this change will be having quite an impact on the market. "Beyond the rates, lifetime mortgages may well be attractive to those who had considered downsizing, but are looking to avoid the hassle of moving and the costs involved, such as paying stamp duty," Rachel commented.

As a result of this popularity, providers have been doing their bit to make these deals more attractive overall, with "82% of the lifetime mortgage market providing a free valuation" and "41% of deals available without a product fee" according to Rachel. She then went on to say: "It's encouraging to see the market adapt to create more flexible products, such as those that provide a drawdown option to suit those looking to draw cash as and when they need it rather than take a large upfront lump sum."

All of this means that despite the recent rate increases, there are still plenty of reasons to consider equity release. That said, before anyone dives in it's always a good idea to seek independent advice from someone who's specialised in equity release as well as mortgages in general. A good adviser would likely also insist you talk to anyone that may be affected by a decreased inheritance, so you're all on the same page before you sign up.

"Choosing the right equity release deal will typically come down to a combination of different factors," concluded Rachel. "Independent product ratings, such as the Moneyfacts Star Ratings, can help highlight the best plans available at a glance, which could then be considered in conjunction with cost."

What next?

Our equity release page not only includes an overview of the deals available and a link to our preferred partner for those who want to talk to a person before deciding, but also plenty of information that should answer some of the most asked questions when it comes to this later-life product.


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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