Well, no providers have left the market and in fact there was a new entrant just a few weeks ago – Godiva.
And when it comes to interest rates, there have been no dramatic or even subtle increases in the past six months. In fact, rates are close to where they were a year ago and deals are still available at below 6%. We have even seen a rate war break out among key providers since the start of the year.
So equity release has not been obviously aff-ected by the liquidity crisis but there has been one subtle change.
Let’s go back a year. The early part of 2007 was a time of great excitement in the equity release market.
A number of providers from outside the sector were well advanced with their plans to enter it.
Several were also looking to add products to their lifetime mortgage ranges following the prevailing trend in favour of such deals, while a select few were planning more innovative approaches.
I guess the good news for firms already competing in the sector is that these aspiring pro-viders have shelved their plans.
And you can easily understand why. The liquidity crisis means their attention has been focussed elsewhere.
But this also means some market innovation has stalled. In the longer term, innovation is vital for the market to progress and this does not need to involve anything too complicated. Godiva is a good example. When it arrived, it launched the first straightforward, transparent, early repayment charge-free lifetime mortgage in the market. We had waited years for such a product and when it cameit was seen as a logical but important development.
It is innovation such as this that could ultimately fall victim to the liquidity crisis, but I guess we should not grumble too much if this is the worst problem the equity release market has to handle.