The market has expanded by five times in the past half-a-decade, up to 200 deals today from a mere 40 in 2014, according to the latest report released by Moneyfacts.
The average overall interest rate for lifetime equity release deals has fallen slightly year-on-year, from 5.27% in February 2018 to 5.24% today.
However, the rates have risen since July 2018, when the average overall rate was its lowest recorded at 5.04%.
Interest charges are not the only cost to a borrower, and today 79 per cent of the market charges a product fee.
More customers choose drawdown
Rachel Springall, finance expert at Moneyfacts, said that it still appears that borrowers are cautious about taking a lump sum and instead turn to drawdown to limit the interest charges on releasing cash from their home.
She added: “As reported in the Equity Release Council’s Autumn 2018 report, drawdown is more popular with borrowers than taking a lump sum, with two-thirds of new customers opting for a drawdown lifetime mortgage in the first half of 2018.
“One of the many elements of lifetime mortgage product to consider is early redemption charges. If borrowers are not careful, they could enter a deal where a penalty applies for as long as 10 years into the arrangement. Indeed, some consumers may have to pay as much as 10% of the advance in the first five years.
“It is worth keeping in mind that that equity release is not solely aimed at the equity rich but cash-poor or for those looking to plug the gap of their later life care costs.
“These types of mortgages could be an option for those hoping to soften any Inheritance Tax blow while lifetime mortgages may also be an alternative to borrowers who have considered downsizing, but who do not want to move and pay stamp duty.”