LV has launched a new equity release product, while closing its existing lump sum product to new business.
The Lifetime Mortgage Lump Sum Plus increases the loan-to-value ratio by 5 per cent at each age bracket, at interest rates between 5.3 and 5.6 per cent, according to the initial level of borrowing.
Meanwhile, LV’s existing Lump Sum product will be closed to new business, although current customers will still be able to apply for additional borrowing.
It will contact all advisers with a current quote or application to offer them the opportunity to switch to Lump Sum Plus.
The provider noted historically, equity release products have been funded from its enhanced annuities, but this business continues to contract following the pensions freedoms.
As previously reported, LV has now sourced external funding, after managing director Richard Rowney said more equity release business could have been written in 2015 but for the enhanced annuity business not being able to cover as a high a volume of loans.
Vanessa Owen, head of retirement solutions products at LV, said equity release has been a growth area for the firm over the last five years.
She said: “Our new funding agreement has allowed us to extend our product range to reach more customers looking to release equity.
“Under the right circumstances, releasing money tied up in a home can provide additional and crucial support in retirement, especially for those who have smaller pension pots, but have enjoyed large gains on their property value,” she added.
Equity release lending increased by £68.3m in the third quarter of last year, compared with the previous quarter, in the biggest quarterly increase since 2004, according to the latest Equity Release Council figures.
Lending rose 21 per cent year-on-year, compared with 18 per cent annual growth in the second quarter and 3 per cent in the first quarter, to reach £452.6m.
In doing so it set a new lending record for a second successive quarter, equivalent to £5m of housing wealth being accessed every day.
Dean Mirfin, technical director at Key Retirement, said LV’s new product reflects the increased demand among consumers for higher LTV lending.
“2016 sees the first major wave of interest-only mortgage maturities, one of the areas needing higher loan-to-value solutions for many customers and LV’s entry into this segment of the lifetime market is both timely and very welcome.
“This new product entry I’m sure will increase competition in this part of the equity release market.”