Rising interest in equity release switching

Published on

Cuts in equity release rates are behind a rise in inquiries about switching plans from existing customers, according to new research from Bower Retirement.

Its study found 53% of advisers have seen a rise in clients looking to move their existing deal to a lower rate with 12% reporting a substantial increase in interest from customers looking for lower rates.

Bower Retirement found that increased competition among existing lenders and new companies entering the growing market have meant rates falling to new lows: average rates are currently around 5.66% and have fallen by nearly 1% in the past three years while the number of plans available has nearly trebled over the same period.

At present, providers have historically low rates with some lenders offering deals below 4.3%, potentially enabling existing customers to move their plan.

However, Bower’s study found advisers believe the market needs more competition if it is to maintain recent strong growth; around 78% questioned said new lenders coming into the market would be the best way to maintain momentum.

Advisers also want to see more innovation with 34% calling for more retirement lending while the same number said further rate cuts would be the best way to continue market growth; the Equity Release Council has forecast the market will exceed £2 billion for the first time in 2016.

“Increased competition in the market with new lenders such as Legal & General and OneFamily launching has meant rates have fallen significantly as the market has grown,” said Andrea Rozario, chief corporate officer at Bower Retirement

“That is reflected in the growing interest in switching plans but it is vital that customers considering moving get independent advice as any savings from lower rates need to be balanced against any early redemption charges or other costs.

“New lenders coming into the market demonstrate the growing demand there is but it is also clear advisers want to see more providers launching this year to further enhance competition.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Cambridge BS opens applications for deposit-building Rent to Home scheme

The Cambridge Building Society has opened applications for its Rent to Home property in...

Life changes could create new wave of accidental landlords

Changes in personal circumstances rather than investment plans could push more homeowners into the...

Remortgage searches jump 40% as borrowers return after summer

Remortgage activity drove a sharp rise in mortgage searches during September, with Twenty7tec recording...

Step One Finance adopts OMS origination platform

Step One Finance has introduced a bespoke loan origination system developed with One Mortgage...

Yorkshire BS HQ woodland found to have high biodiversity value

A four-hectare area of woodland at Yorkshire Building Society's Bradford headquarters has been identified...

Latest publication

Other news

Cambridge BS opens applications for deposit-building Rent to Home scheme

The Cambridge Building Society has opened applications for its Rent to Home property in...

Life changes could create new wave of accidental landlords

Changes in personal circumstances rather than investment plans could push more homeowners into the...

Remortgage searches jump 40% as borrowers return after summer

Remortgage activity drove a sharp rise in mortgage searches during September, with Twenty7tec recording...