Lifetime mortgage product choice soars 63% in twelve months

There are now a total of 75 different lifetime mortgage equity release deals available, an increase of 63% on the number of deals available a year ago and more than double the total number three years ago.

A notable trend has been the increase in the number of equity release variable rate deals available, which has more than tripled from 4 to 14 over the last 12 months. This has been driven by the arrival of OneFamily into the equity release market with its range of lifetime mortgages, including variable rates linked to the Consumer Price Index.

Richard Eagling, Investment Life & Pensions Moneyfacts, said: “It’s clear to see that the equity release sector is responding to the greater demand from elderly homeowners looking to unlock cash from their homes by offering a more diverse range of products and options.

“The growing trend of offering higher LTVs has continued with well over half (57%) of current lifetime mortgage deals offering LTVs at 50% or above (depending on the customer’s age and/or health), compared with just a fifth of deals five years ago.

“A spate of interest rate reductions has made the idea of utilising equity release even more attractive since the Bank of England cut base rate to 0.25%. Since the start of August the average interest rate on a fixed lifetime mortgage has fallen from 6.15% to an all-time low of 5.66%, with some fixed rates falling below 4.00%.

“Key to the diversity that we are seeing in terms of equity release products and lower interest rates has been intensifying competition, with several new providers having already entered the sector, and others preparing to enter, it’s worthwhile for perspective applicants to consider their options.”