Equity Release market shows encouraging signs of re-emerging from lockdown

David Forsdyke, our Later Life Finance expert, gives a fresh update on the Equity Release market.

Following my update in mid-April, I am pleased to report the market is slowly re-introducing physical valuations, there are encouraging signs for interest rates, and we have adjusted how we deliver advice.

Valuations for higher value properties

Equity Release lenders have not been instructing property valuation surveys during the lockdown in keeping with government guidelines and in order to protect older homeowners. Desktop and automated valuations were being used instead, but most lenders placed an upper limit on property values of £1milllion or less which left many Knight Frank clients out in the cold. But the announcement last week that surveyors can now start carrying out physical inspections once again has led to both Lifetime Mortgage lenders and surveyors re-emerging.

This week the majority of lenders in the Equity Release market announced they were re-instating property valuations for higher value properties, and surveyors have released details of how they intend to carry out inspections safely. E-surv, one of the surveyors for Lifetime Mortgage valuations, have published a ‘Safety and wellbeing Charter’ setting out the steps they will take to minimise the risk to both homeowners and their staff.

Lowest interest rates

Lifetime Mortgage rates dropped to their lowest on record shortly before the lockdown began, and competition to rebuild lending pipelines is forcing rates even lower. Last week More 2 Life launched the lowest rate we have ever seen, at 2.48% (monthly interest, 2.51% Annual) fixed for life, and other lenders are expected to respond over the coming days. With Gilt rates currently at an all-time low, there is potential for even lower interest rates.

Changes to the advice process

Our Later Life advisers have traditionally met with clients face to face, however with the safety of our clients at the forefront, we have taken steps to protect our clients by engaging technology such as Zoom, Skype and Microsoft Teams. These platforms allow us to deliver high quality advice safely online while still maintaining face to face contact which we believe is so important. We can also help clients over the phone and via email in order to make the process as safe and as smooth as possible.

If you would like to know more about Equity Release or our Later Life Finance service, please visit the Borrowing Into Retirement section of our website, or call us.

David Forsdyke has focused on the Equity Release market since 2005. Whilst working for the regulator, the FCA, he was a subject matter expert. He continues to contribute to the work of the Equity Release Council and is often asked for comment by the industry press.