Legal & General has reduced the rate for new customers taking out its Optional Payment Lifetime Mortgage. The lender says every new OPLM customer will now receive a tailored rate reduction of between 0.01% and 1.00%, depending on their individual circumstances. Crucially, once that reduced rate is applied, it remains in place for the life of the loan. There is no introductory period that expires after a set number of years.
This is a significant move in the equity release market. An Optional Payment Lifetime Mortgage allows older homeowners to release equity from their property while choosing to make monthly interest payments, or none at all, in any given month. A rate cut of up to one percentage point reduces the ongoing cost for those who do pay interest, and it slows the rate at which interest rolls up for those who do not. For borrowers in lower value postcode districts, every fraction of a percentage point can have a proportionally larger effect because the loan amounts tend to be smaller.
What L&G has changed
| District | Post town | Region | Average price |
|---|---|---|---|
| SR1 | Sunderland | North East | £69,939 |
| DL4 | Shildon | North East | £79,214 |
| TS1 | Middlesbrough | North East | £80,533 |
| TS3 | Middlesbrough | North East | £82,642 |
| DN31 | Grimsby | Yorkshire and The Humber | £82,845 |
| HU2 | Hull | Yorkshire and The Humber | £86,318 |
| SR8 | Peterlee | North East | £89,506 |
| CF43 | Ferndale | Wales | £90,459 |
| BD1 | Bradford | Yorkshire and The Humber | £93,903 |
| DL17 | Ferryhill | North East | £98,478 |
The table above shows average property values across the postcode districts held in the Postcodes UK database. One district stands out for readers in the North East: SR1 in Sunderland is the cheapest postcode district in the sample, with an average property value of £69,939. That is the only district in our current release with an average value below £70,000. For older homeowners in SR1 who are considering a lifetime mortgage, this low average value may influence the maximum loan available.
The lower a property's value, the less equity can typically be released. In SR1, the average value of £69,939 means that even a high loan-to-value lifetime mortgage is likely to produce a relatively modest cash lump sum compared with districts where the average value runs into six figures. That makes the rate on any equity release product especially important. A reduction of up to 1.00% on an Optional Payment Lifetime Mortgage can help preserve more of the remaining equity, whether the borrower chooses to service the interest or let it roll up.
Sunderland's SR1 and the lifetime mortgage rate cut
For a household in SR1, the attractions of an Optional Payment Lifetime Mortgage are clear. The flexibility to make voluntary payments means a borrower can reduce the interest burden when cash flow allows, without being locked into a compulsory monthly commitment. L&G's new tailored rate reduction adds another incentive. Because the reduction can be as large as 1.00%, a borrower in Sunderland could see a meaningful reduction in the annual interest cost on a modest loan amount. Even on a smaller release, the lifetime nature of the discount means the saving compounds over the years.
There is a broader point about regional equity release. While postcode districts in London and the South East often dominate headlines with high average values, districts such as SR1 show that the equity release conversation is not only about large property wealth. Lower value homes still contain meaningful equity for their owners, particularly if the property was bought many years ago. A rate cut from a major lender like L&G can therefore have real practical value in places where every pound of equity matters.
The Postcodes UK database continues to track property values at postcode district level. The SR1 average of £69,939 is a reminder that the housing market is not uniform across the country. When a national lender adjusts its pricing, the effect is filtered through very different local property markets. In Sunderland's city centre postcode, the combination of low average values and a new lower lifetime mortgage rate could make equity release slightly more attractive for homeowners who need to access cash in later life.
The data behind this
The news development was reported by Mortgage Strategy. The average property value for SR1, Sunderland, comes from HM Land Registry data, with postcode boundaries defined using ONS census geography, and is held in the Postcodes UK database. The full table of postcode districts covered by our data release appears above.
In response to reporting by Mortgage Strategy. Analysis and figures by Postcodes UK.