"The market has expanded five times over from five years ago, showing that lenders are primed and ready with a variety of deals for prospective borrowers."
The number of equity release products available on the market has grown by more than 50% in twelve months, according to the latest figures from Moneyfacts.
There are over 200 lifetime equity release deals available on the market today, five times more than in 2014 and more than 50% since a year ago, when there were 131 deals available.
The average overall interest rate for lifetime equity release deals has fallen slightly year-on-year, from 5.27% in February 2018 to 5.24% today. However the rates have risen since July 2018, when the average overall rate was its lowest recorded at 5.04%.
Rachel Springall, finance expert at Moneyfacts, said: “Lenders have expanded their product ranges vigorously, in response to consumer demand for greater choice in the market and, as such, the number of deals available is now at its highest level. The market has expanded five times over from five years ago, showing that lenders are primed and ready with a variety of deals for prospective borrowers.
“It still appears that borrowers are rethinking any plans to take a lump sum and instead turn to drawdown to limit the interest charges on releasing cash from their home. As reported in the Equity Release Council’s Autumn 2018 report, drawdown is more popular with borrowers than taking a lump sum, with two-thirds (65%) of new customers opting for a drawdown lifetime mortgage in the first half of 2018.
“One of the many elements of lifetime mortgage product to consider is early redemption charges. If borrowers are not careful, they could enter a deal where a penalty applies for as long as 10 years into the arrangement. Indeed, some consumers may have to pay as much as 10% of the advance in the first five years.
“It is worth keeping in mind that that equity release is not solely aimed at the equity rich but cash-poor or for those looking to plug the gap of their later life care costs. These types of mortgages could be an option for those hoping to soften any Inheritance Tax blow while lifetime mortgages may also be an alternative to borrowers who have considered downsizing, but who do not want to move and pay Stamp Duty.”