Legal and General is looking at launching new retirement mortgage products through the equity release firm it bought earlier this year.
In February the provider announced its move into the market by acquiring New Life Home Finance for £5m and entering an agreement to be the sole funder of new lifetime mortgages originated by Newlife.
The deal was completed at the start of April, with Kerrigan Procter, L&G retirement’s managing director, saying at the time that the new business avenue would provide a source of direct investment assets to back the group’s annuity liabilities.
Speaking to FTAdviser, Bernie Hickman, L&G’s managing director for individual retirement business, explained that Newlife is soon to be re-branded and will receive a marketing and customer service boost.
“Later this year we’ll be looking at new products and features, particularly around retirement mortgages, which we see as being an underserved market.”
One of the ideas they intend to explore is a five-year fixed rate interest-only mortgage for those in retirement, with the option to transfer into a lifetime mortgage at the end of that term, which Mr Hickman said would help bring more people in at higher loan-to-values.
Santander recently unveiled plans to provide lifetime mortgages from this year which would allow customers to repay the interest on their loan until they die, after which the bank would recover the outstanding balance by selling the deceased’s property.
Earlier this month the Financial Conduct Authority also made lifetime mortgages exempt from the Mortgage Credit Directive, following concerns raised by the equity release industry that changes to the definition would hit new product development and could erode safeguards.
The mortgage credit directive paper, published last week, agreed that a single definition could potentially harm consumers, as individuals would be unlikely to receive the standard of advice expected for equity release.