The Equity Release Council has reported that average rates for equity release products reached record lows of 4.11% in July 2020, with over half of products offering a rate of 4% or lower, and a fifth offering rates below 3%.

Furthermore, equity release rates fell further than other personal borrowing products – mortgages, personal loans, credit cards and overdrafts – over both a one and two-year period.

The Equity Release Council’s Autumn 2020 Market Report revealed that product choice for consumers was up 29% from July 2019 and by 88% since the start of 2019, despite a 5% reduction in product numbers from 401 to 379 between January and July 2020.

However, the impact of Covid-19 was felt in Q2, as the first half of 2020 saw an overall 14% drop in customer activity from the same period last year and a 15% drop in new plans agreed.

David Burrowes, chairman of the Equity Release Council, said: “The unprecedented uncertainty of the first six months of 2020 has affected households and businesses alike, with the equity release market no exception. While pent-up demand in Q1 led to a strong first quarter, the impact of Covid-19 and the lockdown dominated Q2 before showing initial signs of recovery in June.

“Despite this uncertainty, the market has shown resilience and consumers considering equity release continue to find a wide range of product options on the market, while the average rate has fallen considerably over the last 18 months. As the UK’s ageing population seeks to fund increasingly longer retirements, property wealth can play a fundamental role for many people, both now and in the future, as part of a more joined-up approach to planning for retirement. The challenges that lie ahead show no signs of easing, so it is important that people are aware of all the options available to them to help fund later life.

“We believe the robust standards upheld by the Council, which were evolved last year to be outcomes-focused, provide the highest level of consumer protection of any later life property-based loan. Looking ahead, we are committed, now more than ever before, to working with members, industry, government, and regulators to ensure the best possible consumer outcomes.”

Alice Watson, head of marketing, insurance, Canada Life, added: “Despite the unforeseen challenges of the last six months, it’s very encouraging to see the equity release market continuing to evolve to meet the needs of the over-55s. Not only have interest rates continued to fall, but product choice has increased dramatically since the start of 2019.

“Retirement is changing, and so too are the needs of today’s retirees. Homeowners are looking for flexibility and certainty when it comes to planning for retirement, and property wealth has a significant role to play. Over the next few months, we expect equity release to play an even bigger role as part of blended retirement plans, as the over-55s look for financial security in later life.”