The latest research from Moneyfacts.co.uk reveals that so far this month, five out of nine lifetime mortgage lenders have cut or launched new rates, but since the start of June, 90 deals have been withdrawn.
This follows Key’s latest Market Monitor report, which noted a 10% decrease year-on-year in the number of plans taken out – 19,869 (H1 2020) versus 22,126 (H1 2019).
The value of new plans also saw a 12% decrease, now £1.47bn in 2020 from £1.68bn over the same period a year earlier.
Key also reported that 44% of over-55s were turning to equity release to reduce debt, a rise of 7% versus H1 2019, while those looking to use the cash for a holiday or home improvements fell by 4% and 3%, respectively.
Moneyfacts.co.uk found that the number of equity release deals on the market in July was 355, compared to 445 in June, although this is still a substantial increase on 223 in July 2019.
The average rate overall, both fixed and variable, fell in June (4.27%) and July (4.26%) 2020, compared with July 2019 (4.89%) and January 2020 (4.55%).
Rachel Springall (pictured), finance expert at Moneyfacts.co.uk, said: “Clearly these are challenging times for the personal finance industry and consumers debating whether an equity release deal is right for them may be deterred from making any changes to their finances, particularly since the start of 2020.
“Our analysis shows that the equity release market is continuing to adapt, as during July, five in nine lifetime mortgage providers cut interest rates or launched new deals, but some ranges have also been withdrawn.
“This changing landscape could be a sign of providers adjusting to challenges faced during the first half of 2020, and there is hope that the situation will improve as the UK eases out of lockdown.
“Equity release may not be suitable for every person, so seeking advice is crucial to ensure they know of all other options available to them.
“According to Key, less than 10% of consumers who enquire about equity release end up proceeding, and instead may decide to downsize, seek support from family or just decide it isn’t the right time.
“Getting advice couldn’t be more important than now, but a recent survey from CoreData suggests one in five (19%) advisers feel more financial advisers will leave the industry in light of the coronavirus pandemic and four in 10 (39%) expect the pandemic’s influence to widen the advice gap.
“Whatever consumers decide on, it is imperative they compare all their options carefully and consider the impact on any inheritance for their family, for example whether the released funds should be taken as a lump sum or drawdown, and whether downsizing or a retirement interest-only mortgage (RIO) would be a more appropriate choice.”