‘Equity release lifetime mortgage interest rates.’ It’s a commonly searched term on Google, and it’s a popular question that we get asked regularly. The question is though, how have equity release interest rates changed between 2020 and 2023? Find out below.
What was the equity release lifetime mortgage interest rate for 2020?
During Q4 in 2020, the average interest rate for equity release dropped to 4.01%, with some providers dropping their interest rates to 2.30%.
What was the equity release lifetime mortgage interest rate for 2021?
In 2021, reports showed that the average lifetime mortgage equity release rate sat at around 5%, with some products dropping to a low of 2.5% as of May 2021.
What was the average equity release lifetime mortgage interest rate for 2022?
According to the Autumn 2022 Market Report by the Equity Release Council, the average interest rate for equity release in 2022 was 5.74%.
What is the average interest rate for equity release in 2023?
The Moneyfacts UK Mortgage Trends Treasury Report shows the average 2 year-fixed rate across all LTVs rose from 2.86% in April 2022 to 5.35% in April 2023 (+2.49), while the average 5-year fixed rate rose from 3.01% to 5.05% (+2.04). Over the same period, Equity Release Council analysis of Moneyfacts data shows the average equity release rate rose from 4.75% to 6.20% (+1.45).
However the Office for National Statistics, UK House Price Index, May 2023, showing a 30% increase in average UK house prices from £215,236 in March 2017 to £286,000 in May 2023
Bower is a whole of market equity release advice company. We work with all the different lenders, to give our customers access to the best rates and products available in the whole market.
Has equity release got more expensive and how does that compare to standard residential mortgages?
Whilst interest rates have increased since the mini budget of Autumn 2022, the gap between lifetime and residential mortgage rates over the last 18 months has actually reduced. For most of 2022, the average lifetime mortgage was priced at more than 1.5% above the average two-year or five-year fixed residential mortgage. Over the summer of 2023, this rate gap fell to less than 1% compared with five year products and less than 0.5% compared with two-year products.
While this trend reversed slightly at the start of September 2023, lifetime mortgage rates remain more competitive in relative terms than they were a year ago. This improvement is even greater over the long term: in January 2013, the average lifetime mortgage rate was priced almost 3% above the average fixed rate residential mortgage.
For further information or if you have any questions, feel free to get in touch with us at Bower on 0808 169 8316. Alternatively, you can request a callback, send us an email, or message us through the live chat on our Bower Home Finance website.
At Bower, we will understand your unique circumstances and advise you to ensure you are receiving the best plan to meet your objectives. There are plans that allow you to make voluntary repayments and move home, subject to lender criteria. However, early repayment charges may apply in certain circumstances.
Equity release requires paying off any existing mortgage. Any money released, plus accrued interest to be repaid upon death, or moving into long-term care. Equity release will reduce the value of your estate and your entitlement to means-tested benefits now or in the future, and impact long-term care funding.
Bower Home Finance provides independent, impartial whole of market advice with an award-winning customer service experience. Initial advice is provided at no cost to you and without obligation. Only if you choose to proceed and your plan completes, would a typical advice and administration fee of £1,695 be payable.
If you are considering equity release, we strongly recommend that you read our equity release page carefully and talk to one of our specialists before deciding if you wish to proceed.
To find out more about any of the products and the service we provide, please call us on freephone 0800 411 8668, request a call back, email us, or join our live chat you’ll find on our website.
Please be aware that equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. All features and risks are thoroughly explained in your free personalised illustration.
