With interest rates expected to fall in August and potentially later in the year too, you may be wondering if you should put your equity release plans on hold in anticipation of a price drop. Mark Gregory offers his advice to this approach
The Question
What are the interest rates like for equity release at the moment, and are they likely to fall this year?
I am planning to release equity on my home in the next few months but would like to know if it is worth waiting for these long-predicted Bank of England interest rate cuts to happen before taking the plunge. Any advice would be gratefully received.
Mark’s Answer
Thank you for your question – it’s one many people are asking right now, especially with talk of Bank of England rate cuts on the horizon.
The truth is that interest rates have been on a bit of a rollercoaster over the past few years. As someone who’s seen the full spectrum during my career, from historic high interest rates in the late 1990’s, to lows around Covid time – and today we again have a more volatile market – I therefore understand the hesitation. Timing the market perfectly is always tricky, especially when you’re trying to make a long-term financial decision like equity release.
Two popular options: Lifetime mortgage vs RIO
You mentioned you’re considering releasing equity in the next few months. One of the first decisions you’ll want to make is what type of plan suits your needs best. An expert adviser, like those at Equity Release Supermarket, can help assess this with you.
You might consider:
A Retirement Interest-Only Mortgage (RIO)
This allows you to access a lump sum while making monthly interest payments. Some plans even allow ad-hoc capital repayments of up to 10% annually. These often come with fixed interest rates for two, five or 10 years, giving you the option to review or remortgage down the line if rates improve.
A Lifetime Mortgage
The interest rate is typically fixed for life. This certainty appeals to many clients, as you’ll always know what you owe and won’t be affected by future interest rate movements. Plans vary widely – some offer no early repayment charges, while others apply fixed ERCs over four, eight. 10, or even 15 years.
Are equity release rates linked to the Bank of England?
Interestingly, lifetime mortgage rates aren’t directly linked to the Bank of England base rate. Instead, they’re driven by long-term financial instruments like gilt yields, which can behave differently. So, even if the Bank of England cuts its base rate, it doesn’t automatically mean equity release rates will follow, or by how much.
What we do know is that rates can change quickly. Some clients have delayed and seen rates go up. Others have locked in a rate with flexible plan features like drawdown facilities or downsizing protection, and reviewed their options later.
So, should you wait?
The best approach is to get personalised advice based on your situation and goals. Our advice at Equity Release Supermarket is always impartial and whole-of-market, and our advisers can show you what’s available today, including plans that offer the flexibility to switch later.
We only charge an advice fee upon completion and only once you’re fully satisfied and have received funds from the provider.
To speak to a specialist, call 0800 802 1051 or start exploring your options using our smartER comparison tool. Whether you go ahead now or decide to wait, at least you’ll be making a fully informed decision.
Meet our expert…
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
Email kate.saines@emap.com to ask Mark a question
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