Nationwide working on ‘safe’ equity release product

Nationwide working on ‘safe’ equity release product

Nationwide is exploring how to enter the equity release market in a “clear, simple, safe and secure way”.

The building society confirmed it is looking to respond to increased customer need for lending into retirement.

A spokesman for Nationwide stated the lender’s main motivation is to not only help people onto the housing ladder, but also provide the flexibility for older borrowers to stay in their properties longer while at the same time help them make the most of their money.

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The spokesman said: “A huge proportion of people’s wealth is tied up in their property. We recognise that many people would like to unlock some of that wealth and access that income later in life, but be able to continue to stay in their home.

“This is a real customer need and something we are exploring. The challenge is to do it in a clear, simple, safe and secure way.”

A spokesperson added entering the equity release market is still at the “concept stage” and going through research and development, “so it is too early to talk about any potential products or possible timings”.

Earlier reports quoted Nationwide’s group retail director Chris Rhodes as saying the product would likely feature “a decent fixed interest rate without access charges or penalties” and a no-negative equity guarantee, meaning people’s homes would not be repossessed.

Earlier in May, Nationwide pushed its mortgage age limit from 75 to 85, giving the building society the highest age threshold of any high street lender and following in the footsteps of similar moves by smaller mutuals.

The issue of older borrowers has been on the Financial Conduct Authority’s agenda for some time now, with director of strategy and competition Christopher Woolard stating last September that it is becoming increasingly easy to unlock the value of your home, but for many equity release was still “a dirty word”.

Statistics marking the 25th anniversary of the first industry standards being developed for equity release, saw lending up 21 per cent year-on-year to a record total of £393.9m over the first quarter this year, according to the Equity Release Council.

This was partly put down to the FCA’s recent decision to reduce affordability assessments for lifetime mortgages.

Alice Watson, product manager at Retirement Advantage Equity Release, welcomed new entrants to the market, as competition should spur product innovation, ultimately benefiting consumers.

“There are still misconceptions around the equity release industry,” she admitted, as many remember how it was a decade or more ago. “As an industry, we should be proud of how far we have come and unafraid to address inaccurate perceptions about the safety and security of the products we offer.”

Dean Mirfin, technical director of Key Retirement, said: “It will be interesting to see the structure of what Nationwide proposes against those currently available as well as to how they will be distributed.”