Lender Withdraws From Equity Loans
It would appear that the equity loan market is suffering in just the same way as the rest of the homeowner loan market, due to the economic slowdown.
Equity release loans, or lifetime mortgages, have been growing in popularity over recent years, as more and more people entering retirement need additional funds to maintain their lifestyle, over and above their pension arrangements. But a lack of funding in the wholesale money markets has reduced lenders’ ability to offer equity loans in just the same way that most other areas of homeowner loan lending have also been affected.
Whilst there is still a large demand from homeowners wanting to take advantage of the value which is tied up in their home by applying for an equity release loan, a lack of available funding from loan providers has caused the market to shrink and a number of prominent lenders in the equity release loan sector have been forced to withdraw from the market.
Last month it was the Coventry building society which withdrew from equity release loans and just last week, the Newcastle building society announced that it would no longer be offering this type of loan from the end of the year.
Nicola Smith of Newcastle building society said “We have seen unprecedented market conditions, which have affected all areas of the mortgage market significantly. Our equity release advice service is not a viable proposition right now, while the market is currently contracting. We would expect this to reverse as the economy recovers.”
Andrea Rozario of SHIP (Safe Home Income Plans) also commented on the shrinking market, she said “It is a sad reflection that the funding market is doing badly. Unfortunately, demand is not necessarily the issue, it is supply.”
