A combination of falling interest rates and rising property prices is helping those taking out lifetime mortgages, according to new figures released by Age Partnership.

Lifetime mortgage rates have remained below 6% (at 5.87%) for the second consecutive year, while the current average house price of £288,000 marks a record high.

Analysis of Age Partnership’s management information – looking at over 25,000 equity release customers over eight years since they started tracking the data also reveals that lifetime mortgage rates have fallen the most for more mature age groups.

As of April, the average lifetime mortgage rate seen for those between 85 and 89 years old was 5.48%. This is 116 basis points below the level seen in 2009 and is the largest fall seen across all age groups.

The profile of Age Partnership’s average customer using equity release this year to date shows they have on average released £50,626 of equity at an average fixed rate of 5.87% on a property worth £275,920. This means the average customer only tapped into 18.4% of their housing wealth in 2016, leaving a significant majority of their property wealth for future needs and as part of their inheritance.

This proportion is slightly higher than the 16.0% in 2009.

However the remaining equity tied up in the property after releasing cash is still much higher thanks to rising house prices. After releasing equity in 2009, the average customer had £195,678 remaining in their home compared to the £225,294 left to enjoy by the average customer so far in 2016; a 15% increase from seven years ago.

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Simon Chalk Age Partnership commented that: “We expect this period of attractively low rates to continue for some time yet, especially with the entry of new lenders to the market, including household names like Aviva, L&G and even Nationwide saying it plans to offer some form of equity release in future.

“However, even after some residential mortgage lenders recently relaxed the age criteria of their lending, today’s mature borrower faces much tougher lending criteria than several years ago which has brought age discrimination to the front of the news agenda.

“Therefore equity release is an ideal option for many looking to release their housing wealth, whether they need to supplement their income or raise some capital as they can benefit from rising house prices and lifetime mortgage rates at some of their lowest ever levels.

“As well as pushing down rates, greater competition from providers has fuelled the emergence of more flexible products on the market, offering homeowners a greater range of equity release options to suit their personal needs.

“Options like drawdown mean that equity release customers only draw on their housing wealth when they need it, so they don’t pay interest unnecessarily.”

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