The number of lifetime mortgage customers remortgaging fell by 34 per cent this year, according to mortgage broker Responsible Life.
Some 331 lifetime mortgage holders moved to new providers in the first quarter of 2021, compared with 498 in Q1 2020 according to latest figures obtained from the Financial Conduct Authority (FCA).
The pace of switching also fell 28.9 per cent in the year to March 2021, dropping from 1,824 to 1,297.
However, the rate at which homeowners are rebroking their lifetime mortgages has risen by 44 per cent overall in two years, up from 230 in Q1 2019 coinciding with the market seeing a big jump in remortgaging. Responsible Life said this was likely down to borrowers taking advantage of rates dropping between three and four per cent at that time.
Currently, around four in every 100 equity release customers are switching each year, out of more than 300,000 outstanding mortgages.
Steve Wilkie, executive chairman of Responsible Life, said: “Lifetime mortgages don’t stop people switching to cheaper rates and it’s not just older borrowers who can benefit.
“Long time customers may have seen rates fall furthest but younger retirees have the added advantage of a longer remaining mortgage term.
“Persistent misconceptions around the switching of lifetime products could be behind the slowdown in remortgaging that we’ve seen so far this year. The key message for consumers is that larger early repayment charges (ERCs) aren’t necessarily an obstacle to saving money and the younger you are, the less the interest rate needs to fall for switching to pay dividends.”
