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Equity release interest rates rise to 4.26 per cent

  • 24/09/2021
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Equity release interest rates rise to 4.26 per cent
The average equity release interest rate has risen to 4.26 per cent as lenders offer more deals with flexible features that come at a higher cost to the borrower.


Product numbers have increased by 49 per cent from 448 to 668 but despite rising choice, the average interest rate on live plans has climbed from 3.95 per cent to 4.26 per cent over the last six months.

The Equity Release Council says this is because there are now more options to access higher loan to value (LTV) deals, pay some or all of the interest each month or choose between fixed or gilt-linked early repayment charges.













source Moneyfacts

However, there were 86 more deals priced at four per cent or in July compared to the same month last year.

There were 189 in July 2020 with an APR of four per cent or lower, increasing to 275 in July 2021

The trade body’s autumn market report shows the average age of a new borrower taking a drawdown plan has remained stable year-on-year at 70 years old. The average age of a borrower taking a lump sum plan is 68 years old.

Almost a third of new drawdown single plans are being taken out by female customers, the highest level seen in the last two years.

The split of available plans that offer gilt-linked early repayment charges and fixed exit fees was 11 per cent versus 89 per cent.

According to the council, the UK is now carrying over £1.5trn of mortgage debt for the first time on record. However rising house prices and record levels of mortgage repayments have increased homeowners’ property wealth from £4.21trn in H1 2020 to £4.87trn in H1 2021.

The overall value of UK housing stock rose from £5.67trn to £6.42trn over the last year.

The total amount of mortgage debt repaid by homeowners in the first half of 2021 rose by 20 per cent year-on-year to £38bn.

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