Equity Release Latest News

Posts Tagged ‘Saffron’

Aviva Announce News of the First Sub 6% Equity Release Interest Rate for over 5 years!

Tuesday, February 7th, 2012

Aviva today announce an exclusive 5.92%pa interest rate to Equity Release Supermarket on its Lifestyle Flexi plan.

News had it that 2012 was going to be a breakthrough year for the Equity Release Market. Today this statement was confirmed.

The first sub 6% annual interest rate for over 5 years will have a major impact on the equity release market & confidence in general.

Ironically enough, this followed news earlier in the day from Just Retirement that it had just reduced its own rate in reaction to Aviva’s a week earlier. The new Just Retirement rate of 6.15% pa was considered extremely competitive until Aviva gatecrashed their party later on in the day.

Today’s groundbreaking news on the Aviva Lifestyle Flexi plan has come hot on the heals of my previous news items of 27th January  & 30th January in announcing earlier Aviva and LV= rate reductions.

 

So why is there such an equity release interest rate war currently?

We need to look at the market as whole, the recent economic factors & how these companies are funded.

Both Aviva & Just Retirement are big annuity providers & companies with the backing of annuities have been able to ride the storm, ever since the credit crunch began a few years ago. You may be aware that most equity release companies with bank funding such as Saffron, Coventry Building Society & Hodge Lifetime to some degree, have dropped out of the market. Longer term funding has been an issue for them.

 

However, this doesn’t answer the whole story, so lets look a bit deeper…

We have mentioned the credit crunch. It is evident first hand from our Equity Release Supermarket data that a significant element of equity release loans are for financial, rather than lifestyle factors. This means there is a greater emphasis on ‘need’ rather than ‘wants’.

Retirees in general are finding retirement a financial struggle in trying to make ends meet. Overall attitude towards retirement & their legacies has also changed over the years with a more ‘live for today’ motto. With drawdown equity release plans becoming increasingly popular, this lends true to our analysis.

People are taking just enough for today to clear debts, help the kids & have a small amount behind them to provide that ‘cushion’ that provides them with a feel good factor.

 

 

The Aviva Lifestyle Flexi Deal in Finer Detail

Market leading fixed interest rate of 5.92%
£500 cashback on completion
FREE valuation upto £1 million
Drawdown equity release scheme
Earliest age for application of 55 years
Minimum £10,000 initial loan
Minimum property valuation of £75,000

 

In addition to the great news on their lowest interest rate for years, now is as good time as any to take out an Aviva Equity Release Plan. With both a £500 cashback & free valuation offer, the net set up costs for an equity release application are now minimal. With Equity Release Supermarket’s advice fee being lower than its major competitors, then now is the time to seriously considering taking out an equity release plan with Equity Release Supermarket, if you have strong intentions to do so anyway.

 

Early Repayment Advantages with Aviva

With GILT rates at a current all time low, it would also favour equity release lenders who use gilts to govern their early repayment charges. Aviva use an individual government gilt to measure whether a future early repayment charge will apply. The yield of this gilt is noted on the day the equity release plan starts. Upon redemption, the yield is noted at that point & gauged to see whether it has it increased or fallen during that period.

 

Should the gilt yield have increased or stayed the same then NO penalty will apply. Aviva will even permit a reduction of 0.12 basis points before even applying a penalty. Therefore, with gilt rates currently being so low, there is less likelihood of the yields falling today than ever previously. However, this cannot be guaranteed & if you are considering early repayment then please speak to our team of advisers first.

With a national team of equity release advisers who can provide both face-to-face & phone based financial advice, we are only a telephone call away from offering you a market leading equity release deal.

If you would like to take advantage of a free initial consultation regarding the Aviva or any other equity release mortgage, please call the Equity Release Supermarket team on 0800 678 5159 or email mark@equityreleasesupermarket.co.uk

 

The following links provide further equity release information: –

Request an Aviva quote  | Request a Just Retirement quote  | Find a local adviser |

Equity Release Calculator

 

Prudential Set To Withdraw From Selling Equity Release

Tuesday, November 24th, 2009

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 mark@equityreleasesupermarket.co.uk

 

Saffron’s Withdrawal Leaves The Equity Release Market Lacking Spice?

Tuesday, September 29th, 2009

Saffron Building Society  has announced it is to withdraw, albeit temporarily, from the equity release  market after meeting its lending targets for this year.

It has taken this action following a successful year of lending in which 2009 targets have now been met. Also by Saffron withdrawing from the sector now will ensure their lending portfolio remains balanced and within borrowing strategy.

 

A sensible approach maybe?

 

However, this follows the latest setbacks to the market, which has resulted in lenders pulling their products or even positioning themselves so as to reduce their exposure to the equity release market.

This has added in a long line of lenders removing their equity release schemes  over the past 12 months; we had Retirement Plus who had funding issues, Dunfermline hit by the credit crunch & Godiva who recently felt longer term funding was too expensive & consequently decided to ‘temporarily’ withdraw from the equity release market.

 

Also, recognized lenders such as Bradford & Bingley, Standard Life and Bristol & West whom all used wholesale markets to fund their new business, pulled out of the equity release market last year.

Who knows if any of them will be back – certainly not in the short term?

 

Last week New Life Mortgages  reviewed its equity release product range. The New Life Gold product which offers their highest release possible, had its maximum facility slashed by 8%, effectively ruling itself out of the maximum loan end of the market. It also withdrew both drawdown products which are now under review & possibly re-introduced later this year.

But it’s not just the equity release companies who have been affected. Intermediaries too are under financial pressure with this niche product.

 

We had the news recently that Newcastle Building Society are to withdraw their equity release advisory service by the end of the year. They have offered advice on equity release schemes since 2006 & stated the decision was due to the ‘considerable contraction’ in the equity release sector.

 

In Retirement Services, a prominent player in the tied sales force environment went into administration at the end of July with again lack of funding & a purchaser for the business not found. If a company who had been in the market since the 1990’s is left floundering, what is left for the rest of the equity release market?

 

Well, the demand for advice in equity release is still high, but with providers and specialist equity release brokers  withdrawing from the market, as economic conditions become more strained, only points to one outcome.

 

Lenders want consumers to have choice & access to good quality advice. Hence, the departure of such lenders & brokers and also their competitive equity release schemes means in the current climate – ‘only the tough will survive’.

 

Equity release companies who position themselves carefully, without too much exposure are the ones who will deliver in the long term & ride out the current storm.

 

 
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