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Equity-release rates ‘less than mainstream SVRs’

Average equity-release rates are now lower than average standard variable rates for mainstream mortgages, says Safe Home Income Plans.

Brokers have hailed the news as positive but stress it is vital that the industry gets the point across to consumers.

Ship looked at annualised interest rates for the top 10 equity-release providers and found that the average was 6.14 per cent compared with the average SVR for the top 10 mainstream mortgage lenders of 6.49 per cent. The figures will be a welcome boost for the market after it was criticised by consumer body Which? in January for offering sky-high interest rates.

Norwich Union has since increased its lifetime mortgage rate for broker business from 6.25 per cent to 6.35 per cent. Its direct drawdown rate has risen from 6.6 per cent to 6.65 per cent.

Ship chief executive Jon King says: “It has never been easier, safer or cheaper to take out equity release and these latest figures show just how far the industry has come.

“The fact that the average interest rate from the top 10 equity-release providers is lower than the average from the top 10 mainstream lenders delivers a rebuff to critics who claim that this type of lending is prohibitively expensive and a last resort.”

Rozario Harris managing director Andrea Rozario says: “This shows how the industry has made great strides to cater to customers’ needs but it needs to get this message across to the customer to help them feel confident about the market and to realise that we are not vultures.”

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