Prudential has announced to the industry that it will withdraw from writing new equity release business in the New Year. The insurer will however continue to maintain the current service standards to its existing 14,000 customers.
As reported in earlier newsletters on this site, this follows a trent set in 2009 of other equity release providers pulling its equity release schemes – notably Coventry Building Society (Godiva), Saffron Building Society, Retirement Plus & Northern Rock.
However, the Prudential’s announcement is the first major casualty in the specialist equity release market & may come as a concern. Launched in 2004, Prudential had innovative products & backed by its strong household brand name. Their market share had been 23% in 2008 & 12% of the equity release market in 2009, with total lending amounting to around £1bn.
They have stated that the mortgage book always was planned to be securitised, however with current market conditions this course of action was stemmed. Barry O’Dwyer who is Managing director of retail life and pensions stated that he does not feel this securitisation market to return potentially for another five years.
Other factors Prudential have sited are the up-front costs of equity release provision being too high against the payback period for the capital. Prudential now feel this cash is better deployed to other product areas of the business.
Remaining companies in the market will surely address their positions in light of this. The major providers now left being Aviva, Just Retirement, LV=, Hodge Lifetime, Stonehaven & the home reversion companies of Bridgewater & Home & Capital.
Therefore, anyone considering the Prudential equity release plan must act soon! For a summary of their products and rates please click on the following link…Prudential Equity Release Plans.
Equity Release Supermarket still have a special offer with the Prudential which includes a free valuation & £300 cashback on completion.
If you have any queries or an existing customer please contact Mark Gregory on 0800 678 5159 or email [email protected].