Cautious optimism as equity release activity picks up at the end of Q2

by Aaron Strutt

Jul 25 2023

Higher interest rates have inevitably had a significant impact on the demand for lifetime mortgages like other mortgages, but the gap between residential and lifetime mortgage rates has narrowed over the last year.

A total of 17,028 new and returning customers used equity release products between April and June 2023 to unlock wealth from their homes. All new customers can benefit from being able to make penalty free partial repayments in future to reduce the effect of compound interest, without any obligation to repay the loan plus interest until they pass away or move into long term care.

The number of active customers this quarter was down 29% year-on-year from 23,910 in Q2 2022, although there was a slight increase (2%) from 16,691 in Q1 2023.

A total of £664m was unlocked by new and returning customers between April and June. This represents a fall of 5% on the previous quarter (£699m) and makes Q2 2023 the quietest lending period by this measure since Q3 2016 when £572m was accessed.

Jed Newton, Trinity Financial's lifetime mortgage specialist, says: "While there have been some positive steps to reduce rates for lifetime mortgages, overall the rates are prohibitively high for most clients. The only exception to this is clients who have a desperate need to clear their mortgage or provide funds. 

"Lenders are trying to innovate and create better products but clients need to have cheaper interest rates, particularly when fixing into products for such a long time without any ability to refinance without large early repayment charges."

Call Trinity on 020 7016 0790 to secure an equity release mortgage. 

A Lifetime Mortgage will reduce the value of your estate and may affect your entitlement to
means-tested benefits and tax status.

The impact of not servicing monthly interest payments on a Lifetime Mortgage is that the
outstanding debt can grow rapidly, thus reducing the value of your estate.

For example, if the interest rate was 7% a year, a £50,000 loan would double to £100,000 a year
10 years assuming no repayments are made.

This is an example for illustrative purposes only and personalised advice and recommendations
should be sought from a qualified professional. You are strongly advised to register a lasting
power of attorney. This will allow your affairs to be managed by somebody else if your mental
abilities significantly decline ADVICE. 

There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £495 at application and £995 on completion of the mortgage.