You don’t say? Interest rates spiking and Westminster thrown back into turmoil just five weeks after a drawn-out and tedious leadership contest – all for another one to be needed. Yeah, I’d call that blowing it, too.
Rishi Sunak, the eventual winner of that thankfully speedier second contest, pitched himself as the fiscally safer choice from the outset and the chaos that ensued after his initial defeat, chaos he and his supporters say they predicted, proved his point.
Since Sunak entered Number 10, things have thankfully levelled off somewhat. However, the Bank of England has bumped up rates up yet again – by 0.5 per cent this time.
Less than the previous 0.75 per cent increase, but still another kick in the teeth for mortgage holders and prospective buyers.
What’s more, these rate rises will also worry those coming off previously low fixed rate mortgages. Many will be concerned how such a big change in repayments will affect their daily lives and how, after years of living one way, they will be able to adjust to a new, more financially pressurised set-up. And that’s before we even mention the ongoing cost of living crisis that is hammering much of the world.
Options for older borrowers
However, for those over 55, there could be an interesting avenue to explore within the world of equity release. Obviously, rate rises have also hit the lifetime mortgage market and our products already come with a higher rate than your traditional mortgage.
But the reason for this difference could be at the heart of why accessing an equity release product could be beneficial to many people. In essence, our products are unique in that they demand no immediate repayment and yet can still deliver the cash injection many people need right now. Giving them the time they need and relieving the immediate pressure many feel is getting unbearable.
Now, this is not to say that equity release should be dived into without careful consideration and expert advice, and clearly the option of turning to interest-only needs to be considered where applicable.
Equity release can deliver much-needed flexibility
However, I do believe that our industry is well positioned to deliver the flexibility and help certain people who may need it right now. What’s more, thanks to the hard work and dedication of the Equity Release Council, every product now has greater flexibility baked in, as all new plans give customers the right to make repayments. So, when they are ready, they can potentially limit the effects of compounding interest.
Ultimately, when times are tough, people need options. Equity release is just one option many older homeowners have, and today’s market, in terms of increased flexibility, is in the best spot to give them that choice and then the vital wriggle room to make it as solid a fit as possible.
Continuing this trend of flexibility will help not only our customers, but will also help advisers and firms alike see out this tricky period.
