Moneyfacts has released data that shows the average lifetime equity release rate moving up from record lows.
This, the company says, is due the recent bank rate rises and the fact that six out of the 11 lenders that currently offer lifetime mortgage products increasing interest rates over the last quarter – some more than once.
The lowest ever level was recorded in July of this year, when the average rate stood at 5.03 per cent. That figure now reads as 5.10 per cent. In November 2013, the average rate was 6.11 per cent.
Moneyfacts finance expert Rachel Springall says: “Beyond the rates, lifetime mortgages may well be attractive to those who had considered downsizing, but are looking to avoid the hassle of moving and the costs involved, such as paying stamp duty. It is little wonder then that 82 per cent of the lifetime mortgage market provide a free valuation. There are now more deals without a product fee too, however these deals still account for less than half the market share (41 per cent).
“It’s encouraging to see the market adapt to create more flexible products, such as those that provide a drawdown option to suit those looking to draw cash as and when they need it rather than take a large upfront lump sum. It’s easy to see why this option would be popular, as more traditionally, any remainder of a lump sum could well have been stashed in a basic savings account for later withdrawal.”