Interest rates on equity release products have fallen for five straight months as stability returns to the market in the wake of the mini budget.

Average rates peaked in November and have steadily eased since, according to Equity Release Council figures published this week. Interest rates are now as low as 5.33%. Product numbers are also rising gradually, and should hit 200 in the coming weeks, though that is still down around two thirds compared to six months ago.

Since 28 March 2022, the freedom to make voluntary penalty-free partial repayments has been mandatory for all new Equity Release plans. More than 91,000 customers made 190,374 payments during 2022, up by 48% from the previous year.

“The latest report from the Equity Release Council shows just how far products have evolved in recent years,” says David Forsdyke, head of later life lending at Knight Frank Finance.

”They are more flexible than ever, and are helping older homeowners in an ever widening range of applications. This demonstrates how property wealth is becoming an important financial planning tool. Among High Net Worth Individuals (HNWIs), it is being used to top up or replace income, to improve the tax efficiency of large estates, and to redistribute wealth to the younger generations.”

Indeed, older homeowners could also save money by using their property wealth to fund their retirement rather than drawing down from their pension pots, following changes made by the Chancellor to the Lifetime Allowance (LTA) for pensions in his March budget, as we explored earlier this month.

You can read the Equity Release Council report here. If you are interested in discussing how a lifetime mortgage could be used in your retirement and would like to explore your options, contact our experts. We have access to all providers and can help you find the most suitable solution available in today’s market.