The number of deals has also risen, giving more choice to prospective borrowers.
The average equity release rate has dropped below 5% for the first time since 2007, when Moneyfacts’ electronic records began.
The number of deals has also risen, giving more choice to prospective borrowers. The average equity release rate for fixed and variable rate mortgages now stands at 4.99%, down from 5.10% a year ago and 6.11% five years ago.
Rachel Springall, finance expert atMoneyfacts.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.”
The choice of deals on the market has also increased, as there are now 207 lifetime equity release deals available, up from 164 a year ago and just 48 five years ago.
The Equity Release Council’s Spring 2019 report showed 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.
Springall added: “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.”
Jason Ruse, head of Key Partnerships, said the figures highlightthat equity release isa fast growing market which has seen the number of products soar as competition increases and rates fall.
He said: “This is certainly good news for consumers and they now have more flexibility than ever with regards to the products they choose.
“However, this does present a challenge for the wider adviser community as if you don’t regularly transact business, it can be hard to keep on top of rates and market developments.
“While the fundamentals of equity release typically remain the same, helping your clients to make choices around interest repayments, early repayment charges and inheritance protection can be tricky!
“One option for advisers who want to offer their clients access to these products is to consider referring to a specialist such as Key Partnerships.
“Not only can they do so safe in the knowledge that their clients will receive a high level of service backed up by product knowledge but they will be able to help people that they might have had to turn away.”
