Commenting, Andrea Rozario, director general of SHIP, the equity release trade body, said: “We welcome Defaqto’s balanced review of the rates of lifetime mortgages vs. long term fixed rate mortgages. It clearly illustrates that for a product such as a lifetime mortgage which could conceivably be held by a consumer for more than 25 years, the average interest rates are comparable to much shorter term products without the same stringent safe-guards.
“Measures on lifetime mortgages such as the no negative equity guarantee, security of tenure and no monthly repayments affect the pricing structure of the products naturally leading to a slightly higher rate. However, these safeguards provide a wealth of reassurance that customers want when they choose to access the equity in their homes.
“Within this research, Defaqto also highlighted the growth potential of the market and the benefits that this will bring to consumers. SHIP is actively working to grow the industry and we believe that as the funding issues ease, we will see the market expand and over time, new companies enter the sector.”