Increasing competition within the equity release market is continuing to drive interest rates to new lows, according to Moneyfacts.
Data from the service found the average lifetime mortgage rate when combining fixed and variable deals had fallen below four per cent for the first time on its records, to stand at 3.95 per cent.
This was down from 4.49 per cent a year ago, 5.2 per cent two years ago and 6.06 per cent five years ago in 2016.
The number of deals available was also the highest on Moneyfacts’ records, reaching 488 – up from 405 a year ago, 204 two years ago and just 62 in February 2016.
Last week results from the Equity Release Council showed a total market of £3.89bn in 2020, with more interest-only mortgage borrowers on maturing loans using equity release than ever before.
However, caution remains in the market as the figures showed 10 per cent fewer plans, 11 per cent fewer customers and a 21 per cent drop in drawdown from existing plans than the previous year.
Moneyfacts spokeswoman Rachel Springall said: “The equity release market has started this year awash with rate cuts and prospective borrowers looking to release wealth out of their home will find that the interest charged, on average, has now fallen to a record low.
“Indeed, the average lifetime mortgage rate has fallen below 4 per cent for the first time ever, showing that lenders are keen to meet demand, with some repricing their range multiple times over the past four weeks."
“Clearly, the impact of the coronavirus pandemic on the lives of consumers may have spurred some to seriously consider a lifetime mortgage, either to help fund their retirement or even to provide an early inheritance for their family members who may be struggling.”
If you are looking to release extra funds to support yourself or your family, why not contact us today to see how we can help you to take advantage of this currently very competitive marketplace.