Norwich Union is increasing the rates on its lifetime mortgage by 0.2 per cent.
The interest rate will increase to 7.19 per cent for business introduced through IFAs and to 7.49 per cent for direct business.
The new rates will be effective on loans completed on and after 2 August 2004.
Norwich Union Personal Finance director Mark Kelly says: “Equity release plans provide a solution for many older home owners who have no other way of generating a cash lump sum and want to stay in their own home. In recent weeks we have seen long-term interest rates move upward and therefore the cost to Norwich Union of raising funds has increased. These rate increases reflect the increase in funding costs. Existing customers whose loans have already completed or who will complete before 2 August 2004 are unaffected by this change.”