B&W move could spark equity release price war

A price war in the equity release market could be on the cards as Bristol & West reprices its lifetime mortgage product at 5.95% today.

B&W entered the equity release market three months ago, but has waited until now to take control of this rapidly expanding market.

Research from B&W shows the top end of the market experienced a dramatic reshuffle when Just Retirement launched its 5.99% rate on October 4, and the lender predicts things will heat up further with its own product relaunch.

Prior to the launch of the Just Retirement product, Northern Rock dominated the market with the most competitive rate at 6.15%. But its share of the market drastically reduced after just one week of Just’s entry into the market.

Now both Northern Rock and Just Retirement look set to be beaten to the top spot as B&W’s 5.95% rate seizes control of the market, suggesting a price war could be imminent.

Roland McCormack, managing director of mortgages at B&W, says that by the very nature of a competitive market, other lenders could react to the repricing, though who and when remains to be seen.

He says: “Those that want market share will have to compete. We are in a price war which will benefit both customers and brokers.”

Ray Boulger, senior technical manager at John Charcol, says the entry of several lenders into the market over the past six months has not only stimulated a rate battle but also brought new features to the market.

He adds: “It’ll be interesting to see how lenders like Northern Rock react to B&W’s repricing because they can’t afford to ignore it.”