Equity release - news article 9th Sept 2009
Equity release rates on the rise?
The continued rise in fixed rate products and the recent closure of Coventry's equity release lending business puts pressure on interest rates for lifetime mortgages. Recent rate changes on Just Retirement deals have also seen an increase in rates and the fees asscoiated with equity release, however Just Retirement remain a major industry player and still offer market leading rates.
Coventry have suspended the sales of new equity release loans due to the rise in funding costs. They hope to return to the market when conditions are better, however their competitive products will be missed. A spokesperson has confirmed they will continue to service existing clients. They felt is was fairer to stop lending and review their position when lending terms were more "benelovent" and cheaper money was available from the "wholesale" markets.
Lenders expect rates to rise for fixed rate borrowing, as we have seen with tradtional mortgage lending. As lifetime mortgages offer a fixed rate for life, they too are likely to suffer increases. What does this mean for equity release clients? Due to increased competitiion in the equity release market, rates are no higher than those seen a few years ago, however it is important competition remains in the indutry to stimulate competition & ensure those people looking to release equity can obtain competitive terms.
One way to ensure you get the best equity release deal available is to shop around and not rely on the information from a single company. Existing equity release clients may be able to obtain cheaper deals, especially for those clients who arranged deals several years ago with the likes of Norwich Union or Mortgage Express.
