FAQs

Gilts or bonds are issued by the UK Government and by private companies. Buying a gilt or bond means that you lend money to the issuers for a fixed time period in return for a fixed interest rate. Gilts are considered the safest bond category as it is unlikely that the UK Government will default. Equity release interest rates are substantially lower than they were a few years ago, from over 7% to nearly 5%. Contrary to standard mortgages this was not driven by the cuts to Bank Rate. The dropping rates arise because lenders – generally insurance companies – raise the amounts they lend through diverse resources. Equity release provider rates depend on the principal returns on government bonds. These gilt “yields” have dropped since the Bank of England (BoE) started printing £375bn of “quantitative easing”, to fuel the economy during the 2008 recession. For that matter, insurance companies were able to drop equity release rates.