Fixed lifetime mortgage interest rates fell for the seventh consecutive month in June 2017, according to Moneyfacts.

The firm says that consequently an equity release customer taking out a fixed rate lifetime mortgage could save around £32,000 when compared to a customer who took out a similar product a year ago.

The research shows that the interest rate on the average fixed rate lifetime mortgage has just fallen again, from 5.55% in June to 5.53% in July. This is down from an average rate of 5.77% in December 2016, before the run of rate cuts, and an average rate of 6.25% seen a year ago.

Moneyfacts said the cumulative impact of the reductions that have been made over the last year should result in significant long-term savings for equity release customers. An individual opting to release a lump sum of £75,000 from the average fixed rate lifetime mortgage today would face an outstanding debt of £168,151 in 15 years’ time, £18,055 less than the same customer who opted for a similar equity release product a year ago. The amount of interest saved over a 20-year term is even higher at £32,060.

Someone opting for an average fixed rate lifetime mortgage today would save £40,816 in interest over a 15-year period and £73,968 over a 20-year period compared to a similar customer seven years ago. These savings over a 20-year period would rise to £135,309 if they were to opt for the current lowest fixed rate lifetime mortgage of 3.82%.

Richard Eagling, head of pensions at moneyfacts.co.uk, said: “The greater number of lenders entering the equity release market combined with new sources of funding has helped to intensify competition among equity release providers, leading to lower equity release rates. One of the main concerns that face those contemplating equity release has traditionally been the way in which the interest can roll up quickly. However, even a small reduction in the interest rate can have a significant impact on the final outstanding debt.

“The extent to which equity release interest rates have dropped in recent years has not only enhanced the products’ appeal to new customers, but has also made it worthwhile for existing equity release customers to review their products. This is particularly the case for those who may have taken out a lifetime mortgage seven years ago, when rates peaked.

“With rates at record lows and a greater number and range of products to choose from, there has never been a better time to consider equity release.”