Analysis by the industry body found equity release rates improved by bigger margins than mortgages, personal loans, credit cards and overdrafts over a one- and two-year period from July 2018.
Average rates for equity release products reached a record low of 4.11 per cent in July 2020, with half of products offering a rate of 4 per cent or lower.
Over the past two years the average equity release product fell by 1.11 basis points, compared with 0.97 bps for a two-year 95 per cent LTV mortgage.
In contrast, personal loans of £5,000 saw a rise of 0.04 bps, credit cards 2.19 bps, and overdrafts of 11.95 bps. However, figures for the latter two were impacted by a change in methodology by the BoE in March 2019.
The Equity Release Council noted the impact of Covid-19 on the market however, with the second quarter of the year seeing 7,341 new plans agreed, compared with 11,079 in Q1.
The first half of 2020 saw a 14 per cent drop overall in customer activity from the same period last year, and a 15 per cent drop in new plans agreed.
The number of returning drawdown customers, at 15,413 in H1 2020, was down 13 per cent year-on-year.
According to the industry body, the figure is at its lowest since H2 2017 (13,209) as borrowers “paused to assess” the impact of the coronavirus before making use of agreed reserves.
David Burrowes, chairman of the Equity Release Council, said: “The unprecedented uncertainty of the first six months of 2020 has affected households and businesses alike, with the equity release market no exception. While pent-up demand in Q1 led to a strong first quarter, the impact of Covid-19 and the lockdown dominated Q2 before showing initial signs of recovery in June.
“Despite this uncertainty, the market has shown resilience and consumers considering equity release continue to find a wide range of product options on the market, while the average rate has fallen considerably over the last eighteen months.”
Commenting on the findings, Stephen Lowe, group communications director at Just, said: “Customers are benefitting from lower borrowing costs on lifetime mortgages and the rapid expansion of more flexible options.
“These product innovations are helping to attract a broader range of customers from people looking to boost their income, to those needing a cash lump sum and others wishing to gift money as part of estate planning.