OneFamily has announced its intention to enter the lifetime mortgage market during the first half of 2016 with a “unique product offering” available exclusively through advisers.
The launch, which is subject to regulatory approval, is aimed at making the mutual one of the most flexible equity release providers in the market.
The new products will be structured to enable families to protect their inheritance and to make the most of their home’s value. the business promised that customers and their families will be able to pay some or all of the interest each month, in order to avoid any negative impact of rolled-up interest.
For what it claims to be the first time in the sector, the products will offer variable interest rate pricing, linked to the Consumer Price Index, alongside the traditional fixed rate options.
They will also offer fixed term early repayment charges, a down-sizing guarantee and the option to stop paying interest and to switch to one of OneFamily’s other products.
Simon Markey, chief executive of OneFamily, said: “The lifetime mortgage market is growing rapidly, as more homeowners over the age of 55 make use of their housing wealth to support their finances in later life.
“With that as our driving ambition and strategy it is only natural we should seek to enter the market and to do so in such an innovative way. These new products will allow an intermediary’s clients and their families to make the best use of their most valuable asset, their home.”
Leading this venture will be Georgina Smith, appointed as the managing director of OneFamily Lifetime Mortgages, which will operate as a separate business unit under the authority of the wider group.
She was previously chief executive and marketing director at Stonehaven.
Ms Smith said: “Our unique proposition recognises that many people approaching retirement with interest-only mortgages will be coming to the end of that product, still in debt, yet unable to re-mortgage to pay that down.”
The company added that all its new plans will be underpinned by The Equity Release Council safeguards and based on the highest ethical standards, as befits a mutual organisation.
Alice Watson, product manager at Retirement Advantage Equity Release, said new entrants to the market are welcome proof of the progress made in recent years.
“Growth in new equity release business during the second half of 2015 was as its fastest since before the financial crisis, and activity in 2016 so far is looking equally strong.
“Ultimately it is consumers who benefit from new entrants to the market, as it drives innovation and leads to new solutions which provide the flexibility and features to cater for an increasingly diverse range of customers.”
Andrea Rozario, chief corporate officer at Bower Retirement Services, said: “I’m sure the whole industry will be interested to see exactly what the family-focused products and the underwriting will look like.
“Over recent years we have seen several providers produce increasingly competitive and flexible products and this trend is likely to continue.
“For some customers an ability to protect an element of equity to pass on to family in later years is important, while for others releasing property wealth enables them to help their family members immediately.”
peter.walker@ft.com
