SHIP welcomes Defaqto’s lifetime mortgage findings

Equity release trade body Safe Home Income Plans (SHIP) has responded to a recent report from Defaqto showing that the average fixed rate charged for lifetime mortgages has increased compared with its closest alternative in the residential mortgage market, the long-term fixed rate mortgage.

Director general of SHIP, Andrea Rozario, said: “We welcome Defaqto’s balanced review of the rates of lifetime mortgages versus long-term, fixed-rate mortgages. It clearly illustrates that for a product such as a lifetime mortgage, which could conceivably be held by a consumer for more than 25 years, the average interest rates are comparable to much shorter-term products without the same stringent safeguards.

“Measures on lifetime mortgages such as the no negative equity guarantee, security of tenure and no monthly repayments affect the pricing structure of the products, naturally leading to a slightly higher rate. However, these safeguards provide a wealth of reassurance that customers want when they choose to access the equity in their homes.

“Within this research, Defaqto also highlighted the growth potential of the market and the benefits that this will bring to consumers. SHIP is actively working to grow the industry and we believe that as the funding issues ease, we will see the market expand and, over time, new companies enter the sector.”