Equity release pricing and availability

The appetite for equity release is going to grow massively next year, but that market is going to have to be very careful. We are already hearing of people releasing equity as a safety precaution due to the cost of living crisis and with rates still being higher than previously this potentially could cause long-term issues. The current rates and product choice are starting to improve, but as we see more providers getting the appetite to lend back, we should see a more competitive market and with that rates should drop and there will be more products available. My advice hasn't changed for equity release: it is still that you need to make sure that you are releasing the equity for the right reasons.

Like other markets, equity release is starting to stabilise. Lenders like More2Life arelistening to brokers and bringing rates down, while others like Canada Life are coming back into the market, which is giving some confidence back to brokers. But rates overall are still high and, when rolled up, are enough to turn the stomach of any potential clients. Lenders need to get a grasp of the current loan to values, as increased rates and lower LTVs are now making equity release a much less attractive prospect. For some clients, it's their only option, leaving them with very little equity left in their properties. If you are looking for equity release, we recommend you look for a reputable advisor, with accreditation from the likes of SOLLA, which will ensure that this is the right thing for you and ensure that are fully aware of the risks involved.

1. We are seeing incremental decreases with many lenders on headline rates, although this is not always being reflected in rates for further advances, which some clients are now enquiring about due to cost of living increases that have had an impact on people's long term financial planning. With the rate increases of the past few months, the maximum LTVs offered by lenders has decreased significantly. I do not believe we have yet seen an increase in LTVs to match the lower rates available so there is likely to be an anticipation of decreasing property prices as well as concerns over the roll up of interest at higher rates. 2. I think we could well see continued, if decreased, volatility throughout 2023 if the current government can manage to avoid any more interesting economic behaviour. Normalisation? Maybe early 2024, but not likely to be at the very low rates of a couple of years ago. 3. There is still a fair amount of choice for mainstream cases but clients needing high loan to value are likely to struggle for the foreseeable future. 4. I think that rates will need to stabilise at a lower level than where they are currently and that we will need to wait for the predictions of 30% drops in house prices to prove to have been wrong. 5. Advice to customers at the moment depends very much on need versus aspiration. There will always be customers who need to act and those who can safely wait and that is difficult to encapsulate in a couple of sentences but minimising initial borrowing is appropriate for many.