Equity Release Regulation FlawPosted on: 26 March 2008 by Gareth Hargreaves
The number of people over 55 who would consider equity release if the market was regulated has doubled in the past year according to new research from Prudential Equity Release.
Lifetime mortgages will be regulated by the Financial Services Authority (FSA) from October 2004 and the latest research from Prudential reveals that consumer confidence in this market is likely to increase with the arrival of regulation. In particular the number of those over 55 with a mortgage who would consider equity release, if regulated, has nearly tripled to 31%.
The number of people releasing equity from their home in retirement has already doubled in the past year to around 300,000. With rising house prices set against pension uncertainty and lacklustre stock markets, Prudential says demand is set to increase yet further and predicts the market could grow to £6.8bn by 2008.
However Prudential is concerned that there will be consumer confusion since Home Reversion plans are not included in the forthcoming regulation.
Ali Crossley, Head of Equity Release at Prudential, said: “Our research shows that the imminent arrival of regulation has increased people’s confidence in the equity release market as a whole, but there is a danger they will be unable to distinguish between regulated and unregulated products.
“Home Reversion plans currently sit outside the proposed regulatory regime since they are not classed as mortgages. We believe the whole market should be regulated."
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