Product choice in the lifetime mortgage sector has remained significantly lower since last September’s “mini” Budget, with less than half the amount of products currently available on the market than there was nine months ago.
According to the latest data from Moneyfacts, there were 264 lifetime mortgage products available at the beginning of June, down 66 per cent from the 597 that were available at the beginning of September last year.
The availability of lifetime mortgage products plummeted in the months following Liz Truss’s disastrous “mini” Budget as hundreds of lenders pulled products from the market.
Some 527 products were available immediately after at the beginning of October, but this dropped to 310 in November and 187 in December.
At the start of this year there were 179, moving up only to 264 six months later at the beginning of June.
Despite this reduction in choice, the health of the sector was reported to be strong by the Equity Release Council earlier this year.
In its annual report published in April, the council highlighted that activity in the sector reached record levels in the final half of last year.
At the time, Equity Release Council chairperson, David Burrowes noted that living costs and the increased versatility and flexibility of equity release products had helped boost the popularity of the product.
Performance on the ground seems to be mixed, with some equity release advisers reporting that equity release products are currently difficult to recommend to clients given the high interest rate environment.
Indeed, business levels were so impacted at the beginning of this year that equity release provider Key laid off 13 per cent of their workforce in March, citing the “mini” Budget as a contributing factor.
Likewise, Leeds-based advice firm Age Partnership cut nearly 10 per cent of its staff earlier this year, again citing the "mini" Budget as the cause.
Sector having 'existential crisis'
Speaking to FTAdviser this week, some equity release advisers painted a dismal picture of the health of the sector.
“At the moment a combination of high interest rates and low loan-to-values are making equity release an unpopular product,” mortgage and equity release adviser Paul Neal said.
Neal, an adviser at Missing Element Mortgage Services, said that as a broker, it is difficult to recommend something “that is so poor”.
According to data from Moneyfacts, the average combined fixed and variable rate charged on a lifetime mortgage product currently sits at 6.17 per cent.
This is up from 6.17 per cent in May and 4.96 per cent only a year ago in June 2022.
Neal noted that he has seen a very slight increase in enquiries as a result of the rising cost of living and explained that currently, equity release is being seen as a product that is more of a “necessity to live rather than a nice to have” product.
Adding to this, Trinity Financial director, Jed Newton said the lifetime mortgage sector is currently “suffering from an existential crisis”.
