Instead of bowing to pressures in the market, many equity release firms are looking to capitalise on reduced household finances and pension funds by lowering the minimum ages for taking out equity release products, while increasing maximum loan to values.
David Knight, mortgage analyst from Moneyfacts.co.uk, said: “The last two weeks have seen two providers of equity release lifetime mortgages, New Life Mortgages and Prudential reducing the minimum age to which they offer their products to 55 from 60.
"In a market of around 20 providers, only Scottish BS has a lower age limit of 50; and three other lenders have a minimum age of 55.
“According to Key Retirement Solutions, the average age to take out a lifetime mortgage is around 70 years old. But with the current climate of insufficient pension pots many people are expected to need to supplement their pensions at an earlier age and one of the ways of doing this is through the equity found in their homes.
“While releasing equity earlier in life may offer an immediate solution for borrowers needing extra income, there is an enormous difference in the interest charge between taking out a equity release product at an earlier age.
“In times of tightening lending conditions and the first signs of property prices falling, it’s perhaps an unusual time to see this relaxation of criteria in a market dependent on growth and stability for its success. These lenders must be predicting a rosier picture for the medium and longer term."
