Equity release provider Just has reduced the interest rates on lifetime mortgages secured against properties of customers who have died or moved into long term care.
The provider says this will help its customers and their beneficiaries who are unable to sell properties during the lockdown.
The provider said the reduction varied per client and depended on a number of factors but on average each eligible customer would benefit by a few hundred pounds.
Paul Turner, managing director, retail at Just, said: “Many of our customers are unable to sell their properties as the government lockdown has effectively closed the housing market.
"We don’t have the power to open the housing market but we can help our customers and their families by giving them hundreds of pounds on average.”
The change has been backdated to take effect from March 26 for customers or their beneficiaries with properties to sell on or before that date.
For customers who die or move into care after March 26, the provider will adjust the interest rate on the lifetime mortgage from the date of death, or when the borrower was admitted to long term care.
Just offers borrowers the option to pay some or all of the monthly interest amount. The total amount owed and any accrued interest must be repaid within 12 months of the borrower, or joint borrowers, dying or moving into permanent long-term care.
The policy will remain in place until June 26, unless the social distancing restrictions affecting the housing market are lifted by the government before that date, or Just decides to extend the policy.
Martin Wade, director of Access Equity Release, described the decision as “an incredibly proactive move by Just, aimed at those who will feel very vulnerable at this time.”
Joanna Leyden, director of Monument Financial, also said the decision was a positive example of a lender that was helping customers who would otherwise be adversely affected due to circumstances outside their control.
Ms Leyden added she would like to see more similar initiatives in the market, although not necessarily of a financial nature. “For example, some lifetime mortgage lenders appear to have effectively shut down their new business stream by virtue of taking an unprecedented time to even produce a quote.”
Ms Leyden said such “sub-standard” levels of service were “undoubtedly having an adverse effect on consumers who may by necessity be forced to accept a higher rate of interest than would otherwise be available.”
chloe.cheung@ft.com
