Fall in equity release rates continues to outpace other products

Fall in equity release rates continues to outpace other products

When the older generation needs extra cash, for whatever reason, do they consider releasing equity in their home as opposed to borrowing by using a credit card or overdraft?….Looking at the products rates, they should.

Average equity release rates fell significantly between July 2016 and January 2017 as competition between providers continued. The number of products available from members of The Council also continued to grow. A fall of 51 basis points (bps) took the average rate for equity release plans to 5.45%, down from 5.96% in July. This extent of price drop is greater than seen for any other personal borrowing product, with personal loans of up to £10,000 experiencing the second biggest fall over the same period (46bps). Compared to January 2016, the average equity release rate has fallen by 75bps, compared with 60bps for £10,000 personal loans. Growing competition and innovation mean an increasing number of equity release products now offer rates that are lower than the average five year 95% LTV mortgage (4.58%) or standard variable rate (4.23%). Falling rates have been accompanied by a growing range of product features and flexibilities on the market, helping advisers to identify solutions for consumers that are specifically matched to a range of individual needs. Unlike residential mortgages, lifetime mortgages recognised by The Council continue to provide customers with a guaranteed fixed or capped rate of interest for an indefinite term; guarantee the right to tenure without regular repayments being required, and protect the customer against negative equity with the provider absorbing this risk.