A new survey of its members by Safe Home Income Plans (SHIP) - the trade association which represents 18 equity release lenders and over 95 percent of the market - showed its members predict that the equity release sector will become more competitive from the first quarter of 2006.

All those surveyed believed that equity release interest rates would either stay the same or decrease in 2006.

SHIP members also predict that set-up costs, fees and early repayment charges are likely to fall.  Some providers are looking to lower the entry age as well as securing income and allowing homeowners the option of renting out their property.

New major financial players are soon expected to enter the market with HBSC, Nationwide, Barclays, Lloyds TSB, Halifax and RBS all looking to develop equity release products.

This is good news for homeowners who use equity release to supplement their income in retirement who should benefit from lower interest rates and the introduction of more flexible products.

Jon King, chairman of SHIP said, "2005 has been a very positive year for the equity release industry with low interest rates, growing consumer demand and new providers entering the market all helping bring equity release in to the financial mainstream".

"The SHIP Member Survey shows that 2006 is likely to be even better for consumers with greater flixiblity, lower costs and continued product innnovation.  With home reversion scoming under FSA regulation as well as lifetime mortgages helping to bolster confidence in the sector the future looks bright for equity release," Mr King added.