With Aviva and Legal & General getting involved in the market and Nationwide announcing plans to follow Age Partnership reckoned the market is playing into the hands of customers.
Equity release is in a ‘golden period’ with more providers and lower rates, says later life adviser Age Partnership.
With Aviva and Legal & General getting involved in the market and Nationwide announcing plans to follow Age Partnership reckoned the market is playing into the hands of customers.
Its own research showed that lifetime mortgage rates averaged at 5.87% in 2016 after standing at 5.84% last year, down from 6.70% in 2009.
Simon Chalk, technical manager, equity release at Age Partnership, said: “The average rate for a lifetime mortgage is basically at the lowest it has been, putting homeowners in a great position to take advantage of their housing equity.
“The market average is below 6% and individual products offer some of the most competitive rates I have ever seen, with some variable rate plans starting from as low as 3% for market leading products.
“We expect this period of attractively low rates to continue for some time yet, especially with the entry of new lenders to the market.”
Equity release customers are typically releasing just over £50,000 from their homes.
This represents 18.4% of a typical customer’s housing wealth (£275,920), meaning they are maintaining significant equity for future needs or for their inheritance.
Chalk added: “As well as pushing down rates, greater competition from providers has fuelled the emergence of more flexible products on the market, offering homeowners a greater range of equity release options to suit their personal needs.
“Options like drawdown mean that equity release customers only draw on their housing wealth when they need it, so they don’t pay interest unnecessarily. New flexible repayment options also mean that homeowners can withdraw what they need but make repayments to manage the roll-up of their debt.
“A draw down lifetime mortgage also allows customers to access a reserve facility to obtain an amount they need to be comfortable for the future and on average, most lifetime mortgage customers are left with over 80% equity in their property to support their future needs or to pass on to loved ones.”
