Prudential withdraws from lifetime mortgage market
Prudential has announced that it is withdrawing from the equity release market in the first quarter of 2010.
The insurer, which has been selling lifetime mortgages since 2005 and is listed among the UK’s top three providers, has reassured existing customers that their contracts are unaffected.
Pru’s exit is being seen as a blow to the equity release market as a whole, as its Increasing Cash Reserve Lifetime Mortgage carries a five-star rating from financial analyst, Defaqto, and the group had also been named Best Equity Release Provider 2009 by Professional Adviser magazine.
However, equity release providers are committed in the long term as the loan is only repaid once the borrower dies or sells up, and Prudential’s move is likely to be connected to funding issues.
According to Safe Home Income Plans (SHIP), the body that represents the UK’s equity release sector, equity release volumes fell by 35% in the third quarter of 2009, although the average amount released rose 19% on a year earlier, from £38,189 to £45,434.
SHIP director general, Andrea Rozario, commented: “The drop in the number of plans sold can be partly attributed to the funding issues that the industry is currently facing.”
He added: “While equity release providers are experiencing high levels of customer demand, a significant impact on the quarter’s business figures has been the lack of liquidity in the overall market which has restricted the lending activity of some providers and resulted in the withdrawal from the market of some others.”
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