Equity release will break the sub-5% barrier this year as more funders come to market, more 2 life’s marketing director Stuart Wilson has predicted.
Equity release will break the sub-5% barrier this year as more funders come to market, more 2 life’s marketing director Stuart Wilson has predicted.
Wilson said he is aware of new providers and funders entering the market that will stir things up, while he reckoned institutional investors from defined benefit pension schemes will get involved.
He said: “I expect to see a sub 5% rate this year though how low it goes depends on the funding.
“A lot of funders are looking to get into this market.”
In February last year Legal & General entered the equity release market by purchasing Newlife, which has since been rebranded as Legal & General Home Finance. It offers a rate of 5.3%.
Last year the market saw £1.61bn of lending, a 16% increase from £1.38bn in 2014.
Equity release is commonly seen as a growth area, as Association of Mortgage Intermediaries chief executive Robert Sinclair predicted the market reaching £5bn of lending by 2020.
Wilson said this is the least the market should be aiming for due to the number of customers coming to the end of their interest-only mortgages with no means of repayment.
more 2 life is currently leading the ‘Big Picture’ campaign, which aims to publicise the value of enhanced equity release.
Currently there is a misconception that disclosing health problems make equity release solutions more expensive when the opposite is true, as Wilson said just one in six of customers who are eligible for enhanced plans take them out.
