MortgagesJun 20 2013

Equity release trade body hits out over rate complaints

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Equity Release Council chairman Nigel Waterson has hit out at critics that highlight comparatively high rates on the products, arguing that safeguards introduced to improve consumer outcomes mean companies are taking on higher risks that justify higher costs.

In particular, equity release has safeguards which protects consumers from falling into negative equity, following warnings from the Building Society Association that there could be another house price bubble, Mr Waterson said.

Speaking at the Retirement Planning Summit today ( 20 June), he added that the improving health of the property market is “excellent news” for homeowners who will have more equity to draw on in later life.

He said he believes that equity release providers are unique in protecting consumers from “ever falling into negative equity”.

He continued: “This is just one of the safeguards which exist thanks to Ship’s [Safe Homes Income Partnership, the previous name of the Equity Release Council] efforts to watch over customers and set high standards for the industry over the last twenty years.

Mr Waterson said: “Other provisions include clear customer information, a fully informed sales process involving independent financial and legal advisors, and a guarantee that people can remain in their home for the rest of their lives or until they move into residential care.

“To protect the customer, equity release providers take on a higher level of risk which is exactly why the available rates for lifetime mortgages are slightly higher than typical homeowner mortgages.”

He said that for an increasing number of people, equity release can make the difference between a worrisome, cash-strapped retirement and one rich in activities and interests.

Mr Waterson said: “This is borne out by stellar satisfaction levels and a low level of complaints.

“Hugely respected organisations like Age UK and Saga are comfortable offering equity release products – and the potential arrival of other household names in the market promises even greater choice, competition and innovation to benefit consumers.”