Northern Rock Withdraws From Equity Loan Market
Two or three years ago, the equity release loan or lifetime mortgage market was seeing a huge amount of growth, as many people entering retirement were freeing up the equity locked into their home in order to help fund their retirement, or pay off their existing outstanding personal loans, home owner loans and other debts.
But the credit crunch and following recession has had a huge impact on the equity release loan market, as a lack of wholesale funding for lenders and a reluctance of people to borrow against their home, particularly in the face of falling house prices, has caused a large drop in loan applications.
As a result of this slowdown in the market, several lenders have withdrawn either on a temporary or a permanent basis from offering equity release loans. Over the course of the past few months, the Coventry, Saffron Walden and Newcastle building societies have all withdrawn their equity release loan products on a temporary basis. But now Northern Rock, formerly one of the largest providers of equity loans, has announced that it is to withdraw from the market altogether, offering “low customer demand” as a reason for the withdrawal.
A spokesperson for Northern Rock said “Northern Rock regularly reviews all its products and services to ensure they remain receptive in meeting customer’s needs and are in the best interests of the customer and the company.
In relation to lifetime applications, the products themselves have seen little customer demand and volumes have been low. Therefore it is no longer considered to be a core part of the Northern Rock product range, and we have taken the decision that it will not form part of our lending strategy going forward. We have no plans to return to the lifetime market at the current time.”
