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Equity release mortgages may have bright future

Tue, 07 Feb 2006

The CML (Council of Mortgage Lenders), the powerful body appointed to look after the interest of the major mortgage providers in the UK, has released statistics about the performance of the equity release mortgage market over the course of 2005. The latest figures indicate that this type of loan declined slightly during 2005, with a slide of 13.4 per cent on 2004 figures. However, experts are warning that this does not mean a gloomy future for equity release loans . What is needed, apparently, is an appropriate sales practice (due to the complexity of the loans) to restore the confidence of consumers.

The diverse UK mortgage market is made up of numerous complex loans, with each lender providing a range of deals to remain competitive. Equity release, which is just one of the small niches within the overall residential lending market, is perceived as having good potential for growth. It is currently only a very small part of the market. Experts consider that pensioners in the future will use equity release as voluntary financial planning .

The equity release market is stalled due to caution over the method. Equity release mortgages have had bad press, both here and abroad, due to accusations of poor selling practices. New mortgage regulations, which recognise equity release mortgages as ‘high risk’, should put an end to this. The future could be bright.
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