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NU and Rock lead rise in equity-release rates

Equity-release rates could be set to rise across the market after Norwich Union and Northern Rock increased their lifetime mortgage charges.

NU personal finance director of sales and marketing Darren Carter believes other providers could follow suit, reversing the trend of softening rates over the past year.

Money Marketing revealed last month that an unnamed building society set to enter the equity-release market earlier this year had pulled out at the 11th hour, saying margins were too tight.

HSBC (6.3 per cent APR) and Royal Bank of Scotland and NatWest (7.2 per cent APR) have attracted criticism for entering the market over the past few months with high rates.

Norwich Union has increased the headline rate on intermediary products from 5.7 to 6.08 per cent. Northern Rock has raised all its equity-release rates by 0.1 per cent, with its lifetime fix now at 5.99 per cent.

Carter says: “I would not be surprised if other providers increased their rates as long-term interest rates are going up. I can believe those that say margins are tightening.”

Northern Rock assistant director Ron Stout says: “This was a straightforward business decision in response to changing market conditions.”

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