Copy article

Equity Release rates following mortgage rates, and also decreasing?

Journalist: Newspage News Admin

ended 15. November 2023

The news has been full of conventional mortgage lenders reducing their rates, and the Equity Release market appears to be doing the same.

Just today, Canada Life, More2Life and Standard Life have all reduced their rates with Pure Retirement and L&G also reduced last week.

  • Are you starting to see more enquiries in the Equity Release space?
  • Have you quoted clients recently and can now return to them with better news on rates?
  • Will this revive a somewhat struggling side of the industry?

6 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Simon Bridgland
Director at Charwin Private Clients
It's good to see rates reduce a little, albeit without the wow factor that traditional mortgages have enjoyed in the last week. So I don't see a stampede heading our way just yet.
Enquiry volumes have been steady over the last month or two but are still weighted to those with reasons for their enquiry being needs based rather than aspirational.
Hopefully, the latest CPI figures will help stimulate the market to attract again, those clients wanting to enjoy their wealth or help out others with their property wealth.
Star Quote
Copy

Rowan Frayling
Managing Director at J Finance
Having had a very quiet start to the year for equity release cases, we are starting to see enquiries rise and also looking at contacting those we spoke to earlier this year who decided not to proceed because they were concerned about the rates and the potential compound effect if they weren't able to service the interest.

These rate reductions, coupled with the latest CPI data released, will certainly help those in need of later life lending.
Copy

Editor
Stephen Perkins
Managing Director at Yellow Brick Mortgages
These equity release rate reductions are great news for borrowers looking to raise funds from their homes or were in the process of doing so. However the rates do not drive activity and enquiries in this market as they do with standard residential mortgages as equity release is more driven by need.
Copy

Editor
Rita Kohli
Managing Director at The Mortgage Stop
We've noticed an increase in Equity Release queries recently, though it's still below the levels of the past two years. The lower rates are prompting people to seek advice, particularly regarding settling interest-only mortgages or raising funds for home repairs. We're revisiting past enquiries, especially from those who were considering Equity Release but hadn't decided. These new rates could encourage them, though it's worth mentioning that the loan-to-value ratios aren't very high, so they might not cover all existing loans. As for a significant revival in the Equity Release market this year, it seems unlikely. People are being more cautious and deliberate in their financial decisions, a trend we respect and encourage.
Copy

Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
A reduction in Equity Release rates is definitely in the offing and will be a welcome first step. The newfound liquidity from ER will be a lifeline for seniors, providing them with the means to access the wealth accumulated in their properties without having to downsize. The funds released by parents or grandparents can serve as a seed fund, enabling younger families to buy their first home. Clearly, lower ER rates not only benefit the current generation of homeowners but also empower the next generation by providing them with a substantial head start. As the Bank of Mum and Dad injects funds into the property market through reduced Equity Release rates, a ripple effect is likely to occur. The increased demand for homes, driven by the financial support of parents, can stimulate economic growth within the real estate sector. This, in turn, has the potential to bolster related industries, from construction to home furnishings, amplifying the positive economic impact of reduced ER rates.
Copy

Dan Osman
Head of Later Life Lending (Age 55+) at UK Moneyman
Falling rates will certainly help to encourage the more aspirational borrowers to crystallise their plans but I think there is further to go before falling rates make a large impact. The real benefit at the moment is for the clients who are borrowing on a needs basis and who haven't been able to secure more conventional lending. We have requested several offer re-issues in the last weeks and expect to do more.
In terms of clients just starting their later life borrowing journey, most of the alternative options are likely to be more attractive than a lifetime mortgage for some time to come assuming they are affordable or practical.
The other upside of falling rates, of course, is likely to be increased LTVs although probably not in direct proportion.