"Increased competition in the market with new lenders such as Legal & General and OneFamily launching has meant rates have fallen significantly as the market has grown."
Equity release rate cuts are driving increased inquiries about switching plans from existing customers, according to Bower Retirement research.
53% of advisers have seen a rise in clients looking to move their existing deal to a lower rate with 12% reporting a substantial increase in interest from customers looking for lower rates.
Increased competition among existing lenders and new companies entering the growing market have meant rates falling to new lows – average rates are currently around 5.66% and have fallen by nearly 1% in the past three years while the number of plans available has nearly trebled over the same period.
Some lenders are now offering deals below 4.3%, but advisers believe the market still needs more competition – around 78% questioned said new lenders coming into the market would be the best way to maintain momentum.
Andrea Rozario, Chief Corporate Officer at Bower Retirement, said: “Increased competition in the market with new lenders such as Legal & General and OneFamily launching has meant rates have fallen significantly as the market has grown.
“That is reflected in the growing interest in switching plans but it is vital that customers considering moving get independent advice as any savings from lower rates need to be balanced against any early redemption charges or other costs.
“New lenders coming into the market demonstrate the growing demand there is but it is also clear advisers want to see more providers launching this year to further enhance competition.”