Lifetime mortgage rates have fallen to new record lows following reductions in government bond yields in the aftermath of the Brexit vote, according to Legal & General.
The firm claims these rate reductions have been spearheaded by Legal & General’s Flexible Lifetime Mortgage product, which now offers an interest rate of 3.71%, fixed for life.
By comparison, average Standard Variable Rates on residential mortgages for September 2016 stood at 4.27%.
The fall in lifetime mortgage rates to below that of some SVRs means that some customers aged 60+ and with a standard variable rate mortgage could save money by re-mortgaging to a lifetime mortgage at a lower interest rate.
According to the Equity Release Council, even before the latest reductions, lifetime mortgage rates have dropped faster than any other form of lending for the first six months of 2016.
With the latest rate reductions, the lifetime mortgage market is set to move further into the mainstream as more people look to access the equity tied up in their homes or move from higher interest rate mortgages to a lifetime mortgage.
Bernie Hickman, CEO of Legal & General Home Finance, said: “We are proud to be playing a leading role in making lifetime mortgages more accessible for a larger number of people – enabling them to get more out of their life in retirement. With some rates now falling well below Standard Variable Rates, lifetime mortgages now represent even better value for money, with the potential to reach a broader audience than ever before.
“Legal & General is committed to helping people make the most of their retirement by raising awareness of all of their retirement income options. As the market grows, we look forward to continuing to support advisers as they help more of their clients to establish whether using the equity in their home could help improve their retirement for the better.”