Lifetime mortgage lender More2Life has introduced a 5.94 per cent interest rate just days after an adviser told the firm a “rate starting with a 5 would be nice”.
Stuart Powell, managing director at Ocean Mortgages, sat in on a call with More2Life’s senior management team at the end of last week (November 25).
On the call, Powell said he was asked about the current market and what brokers needed help from lenders with.
He replied: “A lifetime mortgage interest rate starting with a 5 would be nice”.
Three days later, on Monday (November 28), More2Life launched a 5.94 per cent rate.
For a lender to invite brokers on a call to find out what they need is pretty rare.Stuart Powell, Ocean MortgagesIn an email to Powell, More2Life said it had worked with its funder to deliver the interest rate he requested.
The lender added: “You told us that being able to offer ‘rates from 5.99 per cent’ was an emotional and commercial advantage when talking to customers…You asked, we listened and we delivered.
“We will continue to deliver as many positive outcomes as humanly possible over the coming days, weeks and months as we continue to support that market in the new normal.”
Powell said for a lender to invite brokers on a call to find out what they need “is pretty rare”.
He added: “For them to then act on the requests by brokers is unheard of, especially when the request was for slightly lower interest rates.
“In a toughening market, lenders and brokers working together like this has to be in the best interests of all those looking to borrow. This is great news for consumers. Chapeau More2Life.”
Director of manufacturing and adviser proposition at More2Life, Les Pick, told FTAdviser its ‘Flexi Choice Lifetime Mortgage’ will now carry the 5.94 per cent rate.
“The past two months have been somewhat of a rollercoaster for the market but we’ve remained focused on supporting advisers with a range of innovative products, tools and approaches which are designed to help them as they find the best option for their clients’ individual circumstances,” said Pick.
“As we head towards the new year, hopefully this move will serve to provide brokers with increasing confidence that the right solutions are available for their customers.”
What's happening with rates
Lifetime mortgage lenders, which include equity release lenders, have typically been pricing their products higher than mainstream lenders over the past two months.
Earlier this month, advisers reported a significant drop in equity release business with clients hesitant to lock into deals at 8 per cent interest rates in the hope they would come down.
Meanwhile, residential mortgage lenders have been cutting their rates back closer to 5 - and in some cases 4 - per cent in recent weeks.
Accord Mortgages cut its rates by a further 0.45 percentage points this week, bringing a new five-year fixed rate deal at 4.91 per cent.
Since More2Life introduced a sub-6 per cent rate, another lifetime mortgage lender - Pure Retirement - has launched an identical 5.94 per cent rate.
The average lifetime mortgage rate at the beginning of this month was 8.13 per cent, and there were 310 product options on the market, according to Moneyfacts.
Finance expert at Moneyfacts, Rachel Springall, said the equity release market has seen a number of products withdrawn in recent weeks which she hopes will be a temporary measure amid interest rate uncertainty.
Since mid-November, rates on lifetime mortgage products have started to come down, but not be as much as mainstream products, according to brokers.
Moneyfacts will release the most up-to-date interest rate average for lifetime mortgage products on Thursday (December 1), giving an idea of how much the dial has shifted.
ruby.hinchliffe@ft.com
