The number of equity release mortgages fell again in June, as the prospect of further rate rises caused lenders to again start pulling products.
According to Moneyfactscompare data there were 264 equity release products at the start of June, down on the 271 products available at the start of May. However, this is almost a third of the 667 equity release products available a year ago.
The equity release market was severely impacted by last year’s maligned mini Budget, which caused the number of equity release products available to plunge.
According to Moneyfacts figures there were 597 products available at the start of September, which fell to 310 at the start of November.
However while there was a recovery in the wider mortgage market, the number of equity release products continued to shrink further over the winter. At the start of February there were just 178 equity release products available. Although numbers have been edging upwards since then, the recent inflation figures which have raised expectations of higher-than-expected rate rises, has thrown this recovery into reverse.
Despite the reduction in product choice the Equity Release Council said the market remained robust, with lending activity reaching record levels in the final half of last year. The rising cost of living is fuelling demand, as is the high cost of housing, with some equity release loans being used to fund deposits to help the adult children or grandchildren get on the housing ladder.
However there is concern that higher interest rate will dampen demand this year. Equity release provider Key made redundancies this Spring, citing last year’s mini budget as a contributing factor.
Moneyfactscompare finance expert Rachel Springall says: “Equity release product choice dropped rapidly following the fiscal announcement, and availability still remains significantly lower than it was prior to that occasion. Despite this, there are still over 250 products available to those wanting to explore equity release as an option.”
She added that there was now more flexibility in equity release products with many now offering drawdown options.