People considering equity release mortgages are being warned to check the cost carefully after interest rates hit a six-year high.
According to Moneyfacts, the average equity release mortgage now costs 5.63%, the highest since August 2016 after what the researcher describes as widespread rises last month.
As a result retirees have seen the cost rise by £2,000 a year, according to a recent study by LV=.
Rachel Springall, from Moneyfacts, said: “In the midst of rising interest rates, consumers may feel pressured to take out a lifetime mortgage, but it is imperative they seek independent financial advice to ensure it’s the right choice for both them and their relatives.”
Springall added that more people might be turning toward equity release to help with the current cost of living crisis.
“Figures from the Equity Release Council for this year’s first quarter saw customers unlock £1.53bn of property wealth in total. This was up 14% from the fourth quarter of 2021 – previously the busiest quarter on record.
“Much of this could be owed to retirement plans hindered by the rising cost of living, forcing some consumers to consider new ways to plug the gap, such as by releasing wealth tied up in their home.”