Examining the annualised interest rates for the top ten equity release providers, SHIP has calculated the average interest rate to be 6.14 per cent. In contrast, the average standard variable rate for the top ten mainstream mortgage lenders is now 6.49 per cent. In addition, the interest rate for equity release remains fixed for the life of the loan, unlike mainstream mortgages which can fluctuate in line with any change in the base rate.
Given the long term nature of the funding for this type of product, these rates could become more competitive when it is considered these rates are fixed for the entire term of the mortgage, regardless of any changes to the Bank of England base rate.
Jon King, chief executive of SHIP, commented: “It has never been easier, safer or cheaper to take out equity release and these latest figures show just how far the industry has come. The fact that the average interest rate from the top ten equity release providers is lower than the average from the top ten mainstream lenders delivers a solid rebuff to critics who claim this type of lending is prohibitively expensive and an option of last resort. It is clear that equity release compares favourably with many mainstream mortgage products and, for many people, offers a viable solution to their financial needs.”
