Prudential this week finally came out with the rate for its lifetime mortgage product. For the equity release market, this has been a real slow burner. The Pru originally outlined its plans to enter the market in May when it revealed it was cutting loose from former partner Northern Rock, which had been the provider of its equity release product up to that point.
In July it made a daring raid on Norwich Union, hoovering up three of its lifetime mortgage specialists. Then in August it finally released details ofthe product, to be called the Property Value Release Plan. It came with two options, the Flexible Plus and Flexible, with both being drawdown products. One problem though – still no rate.
It finally came out with it at the end oflast week.
The product comes at 6.45 %, with an AER of 6.64 % and an APR of 6.9 %.
Was it worth the wait? Dean Mirfin, business development director of Key Retirement Solutions, says for drawdown schemes, the product looks competitive.
“At 6.45%, it should capture some of the business,” he says. “What the product does is bridge a gap for borrowers who don’t know if they will need more money in the future but would like the facility to be there.
“So provided the LTV fits and clients are happy to pay the rate, there should be reasonable take-up ofthe product.”
Borrowers are paying more for the privilege of a drawdown product rather than a lump sum equivalent. Some industry figures have concerns that with a 6.9% APR it indicates more expensive fees elsewhere.
However, the long awaited launch of The Pru’s product is a sign of how rapidly the equity release market is developing.
With big players queuing up to enter the market, this is the time for more brokers to get educated and see equity release for what it is – a major potential income stream.