"The market average is below 6% and individual products offer some of the most competitive rates I have ever seen, with some variable rate plans starting from as low as 3%."
Rates have fallen across all age groups, but have fallen the most for more mature age groups. As of April, the average lifetime mortgage rate seen for those between 85 and 89 years old was 5.48% - 116 basis points below the level seen in 2009.
The average lifetime mortgage rate also saw a fall across this age group of 25bps from 5.73% in 2015 to 5.48%, despite other age groups seeing slight increases.
This year, customers have released an average of £50,626 at a fixed rate of 5.87% on a property worth £275,920. This means the average customer only tapped into 18.4% of their housing wealth.
Simon Chalk from Age Partnership commented: “The average rate for a lifetime mortgage is basically at the lowest it has been, putting homeowners in a great position to take advantage of their housing equity. The market average is below 6% and individual products offer some of the most competitive rates I have ever seen, with some variable rate plans starting from as low as 3% for market leading products. We expect this period of attractively low rates to continue for some time yet, especially with the entry of new lenders to the market, including household names like Aviva, L&G and even Nationwide saying it plans to offer some form of equity release in future.
“As well as pushing down rates, greater competition from providers has fuelled the emergence of more flexible products on the market, offering homeowners a greater range of equity release options to suit their personal needs. Options like drawdown mean that equity release customers only draw on their housing wealth when they need it, so they don’t pay interest unnecessarily. New flexible repayment options also mean that homeowners can withdraw what they need but make repayments to manage the roll-up of their debt. A drawdown lifetime mortgage also allows customers to access a reserve facility to obtain an amount they need to be comfortable for the future and on average, most lifetime mortgage customers are left with over 80% equity in their property to support their future needs or to pass on to loved ones."
