Around a fifth (19%) of property wealth unlocked via equity release came through remortgaging in the first half of 2021, figures from Key Later Life Finance have shown.

The equity release adviser stated that customers had benefitted from increased flexibility and lower interest rates amid a record-breaking H1.

The figure equates to around £650m released by customers switching to new plans in the first six months of the year, as the data revealed that 3,817 customers remortgaged in H1 compared with 2,130 in the same period last year – a 79% year-on-year increase.

On average, customers chose to remortgage sums of £130,808 from 5% initial rates to 4.2%, which could save them up to £16,000 in interest over 10 years, the analysis also showed. Key stated that these lower rates will also benefit customers who are looking to service interest or mitigate roll up by making capital repayments or are looking to take a further advance.

“Remortgaging has also always been a core part of a specialist equity release adviser’s toolkit with advisers continuing to engage with customers throughout the life of their loan as a matter of course,” commented Key CEO, Will Hale. “Today’s figures highlight the benefits that customers can see from reviewing their equity release borrowing.

“House price increases have also contributed to the growth in this market with existing customers realising that remortgaging is not only about reducing rates but could also provide the opportunity to raise additional capital which is particularly relevant for some customers as the cost-of-living crisis hits finances.”

A succession of interest rate rises have seen the Bank of England’s Monetary Policy Committee increase its base rate from 0.1% last December, to 1.75% at the Committee’s latest meeting at the start of August.

The Bank’s base rate rises have pushed up the cost of equity release plans, although Key’s data showed that the average rate taken out at the end of the first half of this year was 3.65%, compared to 4.33% in the first quarter of 2019.

Hale added: “While arguably remortgaging may slow down as rates rise, the increasingly flexible nature of equity release products mean that this trend is likely to continue well into the future and become a feature of this market.”

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