Experience of the equity release UK market over the past 10 years has proved a mixture of highs & lows. From its origins, there were only a few equity release lenders, such as Norwich Union, Hodge Equity Release, Northern Rock & Home & Capital. Some of these equity release lifetime mortgage companies remain, albeit in their alternative brand names – Aviva & Hodge Lifetime.
Not only has there been change with the lifetime mortgage plans, but also with their regulation. All schemes recommended should now be a member of SHIP (Safe Home Income Plans) which is a trade body established to provide consumer protection on a product that was classed as high risk.
Additionally & more importantly, the FSA (Financial Services Authority) now encompass all the lifetime mortgage & home reversion products currently available. This brings with it consumer confidence & protection which has helped allay the concern for age related products. Since then this home equity release product has developed further with innovative lenders arriving on the scene. Prudential Equity Release , Stonehaven & Just Retirement have all helped bring their individual niches to market. These include the first drawdown equity release schemes, the increasing cash reserve facility & non verification interest only mortgages for pensioners.
All welcome additions & hopefully this attitude bodes well for further development in the future.
However, from a position of strength in 2008/09 with over 20 lifetime mortgage companies in the market, then came the credit crunch. The first companies hit were the banks & building society equity release providers who relied on their savers & interbank lending to finance their equity release funding. Additionally, companies like the Prudential withdrew in late 2009 with a change of attitude to their future in the UK & seeing potential profits mistakenly elsewhere. Stonehaven originally backed by Santander suffered from Santander’s review of their equity release UK operation & only recently have re-entered with a revised interest select equity release.
More recently in 2011 we have seen the re-introduction of New Life Mortgages & more2life; a company that currently offers an impaired life equity release plan for people with past & present medical conditions.
With more UK equity release companies waiting in the wings, the future of the lifetime mortgage now seems to have stabilised again & is certainly more optimistic than 12 months ago.