The volume of options available to consumers has reached a new high according to Moneyfacts data, with 488 options on the market.
Key has suggested that wealth unlocked from the home to support family members is a driver in sales, and more homeowners aged 55 and over are worried about a retirement shortfall according to the Equity Release Council.
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.
“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.
“Now that there are more options on the market than ever seen before, it is essential to seek qualified advice to compare deals and explain the workings.
“In 2020, there was evidence that consumers were drawing wealth out of their homes as a support fund, as according to Key, £755 million was transferred between the generations.
“In addition, borrowers appear to be favouring a drawdown option the most – 70% of all sales in fact were for drawdown last year according to Key.
“By choosing a drawdown product, consumers will save interest compared to taking a lump sum.
“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.
“That said, it is crucial the right steps are made to create an appropriate plan of action to combat any shortfall and as there are other options to equity release to consider, a qualified financial adviser can intervene to ensure the right actions are made.”
