This is according to the latest data from Moneyfacts.co.uk, which revealed the average rate across lifetime mortgages has tumbled to below 4% for the first time in its records.

And while average rates are currently at 3.95%, according to Moneyfacts’ analysis, at the same time the number of deals has expanded to a record high of 488.

Rachel Springall, finance expert at Moneyfacts.co.uk said: “The equity release market has started this year awash with rate cuts and prospective borrowers looking to release wealth out of their home will find that the interest charged, on average, has now fallen to a record low.

“Indeed, the average lifetime mortgage rate has fallen below 4% for the first time ever, showing that lenders are keen to meet demand, with some repricing their range multiple times over the past four weeks.

Covid impact

Although data from the Equity Release Council out last week suggested Covid had caused a slight drop in the number of plans taken out, there was also evidence the pandemic would help to fuel the industry going forward.

Indeed, Key revealed one of the most common reasons, last year, for releasing equity from homes was to support the finances of younger family members – many of whom had been hit financially by the effects of Covid.

Springall added: “Clearly, the impact of the Coronavirus pandemic on the lives of consumers may have spurred some to seriously consider a lifetime mortgage, either to help fund their retirement or even to provide an early inheritance for their family members who may be struggling.”

She added: “A retirement shortfall may well be a cause for consumers to consider a lifetime mortgage and according to analysis by the Equity Release Council, the proportion of homeowners aged 55+ who are worried about running out of money in retirement has increased to over a third (34%), up from 27% a year prior.”