There is speculation that more lenders could make inroads in the equity release market next year. The chairman of the Equity Release Council, Nigel Waterson, has predicted that a minimum of three big-name lenders could enter the arena for the first time at some point during 2015 or by early 2016.
This follows news from Santander that it is considering entering this part of the market during 2015. No firm timescale was given for this but the idea of a lifetime mortgage becoming an option for its customers would certainly change the shape of the marketplace.
Major growth seen in the equity release market
The Equity Release Council released the latest set of figures last month regarding this option. The figures related to the third quarter of 2014, and saw a leap of 12% when compared to the same period the year before. 2014’s third quarter had a total of £375.5 million in lending, while in the previous year the same period saw £284.1 million lent. During Q3 this year, 5,565 brand new clients chose this method of releasing cash as opposed to any other method.
Could other lenders also throw their hats into the ring?
Santander has come forward and suggested this could be a new marketplace for them to consider. However they were not the first lender to consider this as a possibility. Before they came along, Legal and General was also said to be considering this market.
When Nigel Waterson of ERC was interviewed and suggested several lenders could launch into the marketplace in the next 18 months or so, he backed up this suggestion by mentioning he’d spoken to several large lenders already. No names were mentioned but it does suggest his comments are backed up by facts rather than simply being a prediction.
He also stated the Mortgage Market Rules that came into effect earlier this year have also had a knock-on effect on the equity release sector. The tighter rules have made it harder for some to sell their homes and downsize, releasing cash in that way. In some instances equity release has become a worthwhile option to consider in a situation where few other options are present.
What would it mean to have major high street names offering equity release?
We have already seen proof that the equity release market is growing strongly. If Nigel Waterson is correct and a minimum of three high street lenders did enter the market around 2015, this would almost certainly lead to further expansion. The amount borrowed against properties would grow, with more and more people choosing this as a viable option to release cash to tide them over during their retirement years.
Certainly, with property values still rising, this could become a preferred way to release additional cash for some time to come. Now we must wait and see how accurate Nigel Waterson’s predictions are – and how many new players will enter the market next year and into 2016.
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