LV is close to signing deals to secure alternative funding for its equity release business to replace the internal funding lost as a result of the contracting enhanced annuity market.
An announcement, which should allow the re-expansion of the equity release book and the offer of more loans, should come in a matter of weeks.
The group’s third quarter trading update showed that equity release sales fell 46 per cent, from £84m to £45m year-on-year. The group said the fall was mainly due to fact the enhanced annuity business could not cover as a high a volume of loans adding that demand remained high.
Speaking to FTAdviser, LV Life and Pensions’ managing director Richard Rowney said that more business could have been written this year, as the demand for lifetime mortgages continues to rise.
“We’re close to two alternative funding deals, one external, one internal, which are both in the contract stage, so we should be ready to announce things within about four weeks.
“Next year shouldn’t be so constrained because, since the reforms earlier this year, client and adviser interest has been growing.”
Mr Rowney said LV would be investing more with his team focusing on the product innovation which many advisers are demanding.
The latest Equity Release Council figures showed that the value of total lending rose 11 per cent during the first half of this year, compared to the same period in 2014, up from £641m to £710m.
New players look set to enter the market this year and next. In April, Legal and General acquired equity release player Newlife and launched with L&G brand products in June. It hired Andy Humphreys to the role of marketing director for individual retirement in August.
Last month, BlackRock’s managing director and head of European mortgage strategies Olivier Defaux revealed that the asset manager was aiming to enter the equity release market, through managing money for clients and partnering up with originators.