Equity release rates hit record low

That put average fixed rates 70 basis points below the April 2016 figure.

Moneyfacts' research also revealed a 24 per cent increase in the number of fixed rate equity release products on the market over the year, from 66 to 82.

In April 2015, there were just 52 fixed rate equity release products on the market.

I have definitely seen increased demand for equity release in recent months which is partly due to interest-only mortgages reaching maturity.Alan Lakey

Rachel Springall, finance expert at Moneyfacts, said the simultaneous increase in choice and drop in rates would be "exciting news" for homeowners who were "eager to make better use of the cash".

She added that new brands, more drawdown options and "an influx of incentives" had also come into the market.

"Consumers these days may well be facing a retirement shortfall or have failed to set aside enough cash for potential care fees, so an equity release deal could give them a vital sum to enable them to enjoy their later years much more comfortably," she said.

However, she added the decision to release equity should not "be taken lightly", and stressed there would be fees to pay for advice, valuations and legal costs.

"Thanks to increased choice, consumers must now be more diligent when comparing deals, so seeking independent financial advice may prove vital.

"The lowest rate isn’t always the best option when it comes to picking the right equity release plan, and consumers may well prioritise how much they can receive in a lump sum instead.

"This, coupled with differing eligibility criteria such as a variety of minimum age requirements for borrowers, means that the equity release minefield could be much easier to tread when armed with good independent advice."

Moneyfacts' figures come at the beginning of a tax year which many believe will see a major surge in demand for equity release, as the first wave of interest-only mortgages sold in the 1990s reach maturity.

The Financial Conduct Authority has estimated almost half of those with interest-only mortgages will not be able to repay their loan in full.

Of those, 50 per cent would have a shortfall of more than £50,000.

Alan Lakey, a mortgage and protection adviser and director of Highclere Financial Services, said in his experience equity release rates were indeed "lower than ever before".

"Given the nature of equity release underwriting I believe rates are attractive and value for money," he said.

"I have definitely seen increased demand for equity release in recent months which is partly due to interest-only mortgages reaching maturity, and also the nature of being properly rich yet income poor."

james.fernyhough@ft.com