Earlier this month it was revealed from data that interest rates have plunged to below 5% for the first time since records began.

Typically the rate for a fixed or variable lifetime equity release loan was 6.11% in June 2014. In June 2018 this fell to 5.10% and has since plummeted further to only 4.99% just this month.

Over 40 new equity release deals have been launched in the past year as consumers continue to see rates tumbling.

Rachel Springall, finance expert at Moneyfacts.co.uk, said lender competition had driven down the cost of lifetime mortgages to a rate not seen since its records began back in 2007.

As a consequence the equity release market has become much more accommodating to prospective borrowers.

She added: “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.”

Potential challenge

One expert advised however that low rates and high product choice may present a potential challenge for the wider adviser community, if they don’t transact equity release business on a regular basis. Generally on the whole however, this data will be received in a positive light by both consumers and the equity release industry alike.

Jason Ruse, head of Key Partnerships, an equity referral business, said for these companies it can be hard to keep on top of rates and market developments.

He added: “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.”

Drawdown

Meanwhile, Springall pointed out that flexibility in drawing funds was also a key point to consider for many consumers. She referred to the Equity Release Council’s Spring 2019 report which revealed drawdown was more popular with borrowers than taking a lump sum.

“By choosing a drawdown product,” she said, “consumers could potentially save interest compared to taking a lump sum.”