Its flexible lifetime mortgage product now offers an interest rate of 3.71%, while interest rates for standard variable rates (SVRs) on residential mortgages for September 2016 stood at 4.27%.
The drop now means that customers aged 60-plus with an SVR mortgage could potentially save money if they chose to remortgage to a lifetime mortgage at a lower interest rate.
Figures released by Legal & General suggested that customers taking out a flexible lifetime mortgage at a rate of 3.71%, compared to the previous rate of 5.19% in April 2016, could experience large savings.
According to the figures, a flexible lifetime mortgage taken out on the new rate on a loan of £100,000 could see the amount owed after 15 years drop by £40,901. While the amount outstanding after 15 years could fall from £213,608 to £172,707.
However, the Equity Release Council said that even before the latest reductions, lifetime mortgage rates dropped faster than any other form of lending in first six months of 2016.
Legal and General have already urged advisers to drive SVR-holders toward cheaper deals and has already launched a campaign to encourage clients to remortgage.