More lenders predicted to enter equity release
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Home & Capital says a handful of new equity release lenders could enter the sector in the next year despite the recent flurry of firms leaving the market.
The latest lender to pull the plug on its equity release offering was Prudential last week.
Since September several lenders have either suspended equity release lending or withdrawn from the sector including Coventry Building Society, Saffron Building Society, Newcastle Building Society and Northern Rock.
Earlier this year Retirement Plus chose to suspend new lending while In Retirement Services went into administration.
But despite the recent mass exit Simon Little, managing director of Home & Capital, believes this is a good time for new entrants.
He argues that with an ageing population and inadequate pension provision the equity release market can plug the gap.
Little says: “For a long time firms have been sitting on the sidelines and watching this market. I don’t think that just because Prudential has pulled out there is less opportunity.
“We are unlikely to see a flood of lenders getting into equity release but it would not be surprising to see two or three entering the sector next year.”
And Terry Pritchard, managing director of Charterhouse Retirement Solutions, says: “It’s a great time for new entrants in the reversion market. If you think of it as a property fund, the best time to buy in is at the bottom of the market.
“But I’m not sure about the appetite for lifetime mortgages as there is no funding.”
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