Lifetime mortgage rates have started to fall with the average coming to 7.13% and product choice has breached the 300 mark, according to data from a financial research firm.
According to Moneyfacts figures, the average lifetime mortgage rate is 7.13%, down from 7.33% at the start of the month.
It is also down from 8.13% in November last year, after the shock of the mini Budget. This was the highest since Moneyfacts records started in 2007.
Moneyfacts said that the change in pricing was due to several lenders cutting their rates since the start of the month.
Product choice is also starting to recover, standing at 312, which is an increase from 287 at the start of the month. It is also up from 293 in October and 179 in January this year.
‘The choice of lifetime mortgage deals is resilient’
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “A lifetime mortgage could be an option for borrowers to use some wealth from their home to support their retirement plans or help towards the cost of living.
“Those weighing up their options may be pleased to find that lenders have been making rate reductions this month, and that the choice of deals is resilient. The choice of lifetime mortgages has been relatively stable over recent months, but there has been encouraging growth compared to the start of this year.”
She added that a recent report from the Equity Release Council showed that Q3 was the busiest quarter so far this year for lending and over half of new customers chose a drawdown lifetime mortgage.
“As interest rates have been volatile year-on-year, it’s not too surprising to see a slight preference for this option versus taking a lump sum, particularly as the average equity release rate stood at a record high of 8.13% in November 2022.
“A drawdown option may be more enticing for homeowners who only need to release a small portion of wealth when they need it, which will mitigate incurred interest,” Springall noted.
She continued: “Borrowers who are considering an equity release plan would be wise to seek independent financial advice to navigate the abundance of deals and choose the right one that suits their circumstances.
“Lifetime mortgages have several important factors to consider, such as associated fees, drawdown and, of course, the impact on passing inheritance to family members. Hopefully, we will see continued resilience in the market and more rate cuts as the year-end approaches for those looking to take out a lifetime mortgage.”
