Low customer demand has prompted Northern Rock ? the UK government-owned mortgage lender ? to stop offering equity release mortgages, MailOnline has reported. However, Britain?s largest equity release adviser says the opposite, stating over the past few months, the demand for the style of mortgages has increased.
Equity release is a way for elderly people to be able to access some of the cash tied up in their homes and at the same time, avoid moving. Most of the time, a lifetime mortgage allows this and doesn?t have to be repaid until either the homeowner dies or goes into residential care.
Lifetime mortgages were a big part of Northern Rock?s services but now they have stopped selling them through brokers and advisers are concentrating on direct sales since coming under government ownership.
The amount of equity release sold direct has drastically fallen from 75 per cent five years ago to 30 per cent, with the two largest providers being Aviva and Prudential. This shows that the potential market is very narrow.
Despite this, Northern Rock has ensured that current applications will still go ahead and those with existing lifetime mortgages will see no changes. Northern Rock aren?t the only ones to stop providing this service, with other equity release providers, including Newcastle, Coventry and Saffron building societies, deciding to pull out of the market.
Key Retirement Solutions has seen things differently. ?We?ve seen demand increase by 15 per cent over the past three months compared to the previous three and, year on year, we?re only down 15 per cent,? said Dean Mirfin, marketing director.
