Abbey National and British Gas plan to enter the equity release market in 2003.
The companies will attempt to realise some of the potential £7bn value of the equity release market, which is currently worth less than £1bn.
Abbey National will pilot a roll-up scheme in Eastbourne and Tunbridge Wells early this year, followed by a nationwide launch later in 2003.
The Abbey scheme will be available to people aged 60 and over. They will be able to unlock between 10% and 50% of their home's value, depending on their age.
The minimum loan will be £25,000 and the maximum £250,000, with interest fixed at around 7%.
A spokesman for British Gas, the trading name of Centrica, confirms it is looking at equity release products as part of a range that will “help improve customers' quality of life”. The company plans to market a roll-up mortgage to its millions of customers. This will see the loan and interest repaid on the homeowner's death.
News of the Abbey and British Gas interest in equity release follows calls by Nationwide for tougher regulation of the market. The building society has called for a CAT standard specifically for equity release products.