The latest Market Report from the Equity Release Council, the trade body for the equity release sector, reveals a fifth (21%) of equity release rates are now priced at 4% or below, whilst 58% are at less than 5%. The average equity release rate currently stands at a record low of 4.91%.


Recent years have seen growing demand for equity release plans, with property wealth playing an increasingly important role in retirement planning. According to the Equity Release Council, £1.85bn of housing wealth was unlocked in by homeowners aged 55 and above in the first half of this year alone.

Greater flexibility

There are now nearly 300 different equity release plans available, with many lenders offering more flexible ways for people to draw on their property wealth.

Usually, interest on equity released rolls up over time and is only repaid, along with the funds borrowed, when the homeowner dies or moves into long-term care.. However, growing numbers of plans allow homeowners to make repayments if they want to, or to include downsizing protection. This means that if you release equity from your home and later decide to downsize, you can repay what you owe without penalty. In August last year, just 63 equity release plans offered downsizing protection, but this has more than doubled to 129 over the that past year.

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David Burrowes, Chairman of the Equity Release Council comments: “The market’s development has been driven by competition, reinforced by robust consumer protections and product safeguards. As the UK’s ageing population continues to grow, making use of housing wealth will be essential to help all generations meet the financial challenges they’re facing both today and tomorrow.”

The importance of advice

Although equity release plans now offer much greater flexibility, this type of scheme definitely won’t right for everyone, and there’s lots to consider if you’re thinking about taking this route. For example, although it may allow you to free up some extra funds, it’ll reduce the inheritance you leave your loved ones, and it could affect how much you get from certain means-tested state benefits.

Will Hale, chief executive of equity release provider Key, said: “While the ever-expanding range of options is good news for the customers, with great choice comes great responsibility. It is now more important than ever for customers to ensure that they speak to a specialist adviser who knows the later life lending market inside out.”

Always choose an adviser who is a member of the Equity Release Council. This means they must abide by the Council’s statement of principles, which requires them always to act in the best interests of their customers.

Mr Burrowes said: “Customers are also encouraged to have open conversations with family members or beneficiaries before committing to any decision, with family often involved to join conversations with their adviser.”