Provider Reduces Equity Release Loans
Equity release loans, or lifetime mortgages, have been through a difficult time over the course of the last year or so, due to reduction in property values discouraging home owners from taking out a new loan and also from lenders struggling to obtain the necessary funding to be able to offer loans.
A number of lenders have withdrawn form the equity release loan market in the last couple of years, although some are now starting to return to offering loans as demand starts to improve slightly once again.
One provider, Hodge Lifetime, has now announced that it is to reduce its presence in the equity release loan market, in favour of developing its pension annuity business.
Hodge Lifetime were one of the first ever loan companies to offer equity release loans and were one of the founder members of SHIP (Safe Home Income Plans), being partly responsible for introducing the current guidelines for equity release loans and improving the image of this type of loan product.
Hodge say that the main reason for reducing lending in this sector is due to more stringent regulations and the increased requirements for capital and financial liquidity, which have been imposed by the Financial Services Authority (FSA) since the credit crunch.
Although Hodge Lifetime have said that they intend to drastically reduce the number of new loans they are prepared to offer, the announcements will not affect any existing customer who already have an equity release loan with the provider.
Hodge Lifetime have announced that it will still be possible for people with existing loans to take out top up loans in the future, in line with its current requirements and maximum loans to value levels and any loans which currently have a draw down facility built in to the contract will also be unaffected by the changes.
