Legal & General has launched of a 4.44% AER lifetime mortgage.
The Premier Flexible Lifetime Mortgage is the first sub-4.5% fixed rate roll-up lifetime mortgage product in the market.
As well as cutting the rate reduction is a cut to the product arrangement fee, from £4999 to £1999.
For a customer with a loan of £1m, over a 15 year period the new premier rates would represent a saving to the borrower of £87,594 in rolled-up interest, when compared to the product’s former costings.
Bernie Hickman, chief executive officer, Legal & General Home Finance, said: “The introduction of our market-leading sub-4.5% roll-up product represents a big leap forward in delivering on our commitment to offer better value for money when it comes to retirement lending. Whilst representing big savings for borrowers looking to release equity, these reductions are also blurring the lines with the residential mortgage market, making lifetime a mainstream solution for 55+ financial planning.
“At Legal & General, we believe there is a bright future ahead for lifetime mortgages. More and more people are opting to release equity from their homes, whether to fund retirement, pay off an interest-only mortgage or to help the next generation onto the property ladder.
“An estimated £1.4trn of housing equity rests in the hands of the over-55s, but for the market to reach its full potential we must continue to improve consumer value for money and encourage more customers to talk positively about the real benefits of releasing equity for retirement.”
Steve Ellis, chief operating officer, Legal & General Home Finance, said:
“Legal & General is committed to delivering ever better value for money for borrowers looking to release equity from their homes and these reductions in our rates represent a big step towards making lifetime mortgages a mainstream option for the over-55s.
“Even with an expected lifetime mortgage market size of circa £2 billion this year, releasing equity still only makes up a small part of the wider mortgage market.
“There is so much potential for our market to grow, and it’s therefore clear that more needs to be done to improve consumer confidence. With our first sub-4.5% roll-up lifetime mortgage, we believe we are now offering a product that compares favourably with mainstream SVR mortgages, which will allow customers to make more transparent choices.”
The lender has also made significant reductions on its flexible and flexible Plus lifetime mortgage rates, with flexible falling from 4.99% AER to 4.59% AER and flexible plus from 5.35% AER to 4.99% AER.