The difference between, for example, a 6 per cent and a 3 per cent rate can result in saving tens of thousands of pounds for consumers over the lifetime of the loan.
Jim Boyd, chief executive of Equity Release Council, adds: “Importantly, these lower rates have appeared without compromising on consumer protections and have helped to prompt more customers to put their misconceptions to one side and consider equity release as an option.”
Lenders might have a lot of money to play with, but they will still need to manage the risks where the loan value outstrips the value of the property.
When 'No negative equity guarantee' was introduced, it was brought in to protect borrowers, so they or their family would not be liable to pay the outstanding balance.
With the number of people at the lower age band of retirement - at 55 - entering into the equity release market, this has become more of a consideration.
For the lenders, Mr Morris says, they are managing the risk by limiting the amount that can be borrowed to younger people, to ensure that negative equity is less likely to happen.
For example, a 55 year old at the top end of the lending could borrow 25 per cent of the property value, whereas for a 70 year old, the loan could be raised to 40 per cent of the property value.
All this must be taken into consideration when considering equity release lending.
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