Data from the Equity Release Council’s (ERC) Autumn Market Report shows over half of products were offering rates of 4% or lower while a fifth had rates below 3%.

According to the ERC, equity release rates fell further than other personal borrowing products – such as mortgages, personal loans, credit cards and overdrafts – during the both a one and two-year period.

At the same time, product choice for consumers was up 29% from July 2019 and by 88% since the start of 2019, despite a 5% reduction in product numbers from 401 to 379 between January and July 2020.

But while the combination of increased take-up and falling rates provided positive news for the sector, the report also highlighted how equity release had felt the adverse effects of the pandemic.

Indeed, the report revealed the first half of 2020 saw customer activity plunge by 14% compared to the same period in 2020 and there was also a 15% fall in new plans agreed.

But while Covid dominated Q2, the ERC said the signs of recovery began to show in June.

David Burrowes, chairman of the ERC, said: “Despite [the] 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.

“As the UK’s ageing population seeks to fund increasingly longer retirements, property wealth can play a fundamental role for many people, both now and in the future, as part of a more joined-up approach to planning for retirement.

“The challenges that lie ahead show no signs of easing, so it is important that people are aware of all the options available to them to help fund later life.”

Average equity release interest rates, July 2015 to July 2020 (source: Moneyfacts Group plc)

Will Hale, CEO of equity release adviser, Key said: “The Equity Release Council’s Autumn 2020 Market Report shows how hard the market has been working to support customers during the current pandemic. Not only are rates at historic lows but innovation has arguably never been greater with lenders focusing on making products as flexible as possible.

“The fact that equity release rates have fallen further than other borrowing options over a one-year and two-year period highlights how increased competition can benefit older homeowners – particularly at a time when many mainstream lenders are tightening LTVs and lending criteria.”