Good news for equity release clients

Some welcome news this week from Prudential, which has announced that it is dropping the interest rate on its standard lifetime mortgage product with immediate effect.

Maybe the warm weather is affecting its judgement, but more likely it has done a good deal on the money markets.

In reducing its annualised rate from 6.57% to 6.35%, Prudential has notably bucked the recent trend which has seen nearly all lifetime mortgage rates edging upwards, reflecting movements in long-term swap rates. Indeed, on the same day this news hit my desk I had notification from Tomorrow of a rise in its standard rate from 6.3% to 6.7%.

A quick scan of current best buys for a typical case puts the Pru in third place in the table, as you can see on this page.

Prudential’s move is good news for new equity release borrowers – a cut of 0.22% on a £50,000 loan gives a saving of almost £4,000 after 15 years – and it should be applauded for what looks like a smart move. No doubt it will see increased business from brokers as a result. The question is – will other lenders follow suit?

Another big equity release provider has launched a major print and broadcast campaign, but this time we’re promised an angle which represents something of a departure and maybe a small victory for advisers.

According to Norwich Union, its new advertising campaign for equity release will “encourage potential customers to seek the advice of their financial adviser”. This will be in addition to speaking to NU, of course.

NU goes on to acknowledge the important role brokers have to play in the equity release process. I don’t think any readers of Mortgage Strategy would dispute that. If this campaign succeeds in raising awareness of the importance of advisers’ role when it comes to equity release, it too should be welcomed.