Monday, Aug 18, 2008
Can't sell, reverse-mortgage instead
FT: More retirees look to equity release
Older homeowners are stepping up their interest in unlocking equity built up in their homes as the credit crunch and falling property prices reduce their potential income in retirement. Hodge Equity Release – a provider of schemes that can unlock the value of a home while letting the owners continue to live there – has reported a 75 per cent increase in inquiries to independent financial advisers in the past three months. Prudential said it had seen a similar increase in the sales of its lifetime mortgage products in the first half of 2008 compared with a year ago. Norwich Union has revealed it has “more than doubled” the number of quotations it gives for equity release plans since the beginning of the year.
Posted by drewster @ 05:31 AM (435 views) Add Comment
4 Comments
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1. drewster said...
I wonder how the reverse-mortgage providers value the houses - do they just use the same surveyors that made mistakes before?
Also how do they fund the mortgages - in Prudential's case, are they providing money from their huge pensions business? If house prices crash and don't recover for another decade or more (Japan is still awaiting a recovery 15 years after its HPC) then could Prudential end up doing an Equitable Life?
2. Honest Valuer said...
Very few surveyors have made mistakes. Most of us tried to value prudently but were overwhelmed by market evidence of sales at ridiculous prices - all driven by the loose lending policies of the financial institutions. A valuation is at a particular point in time and is not a prediction of future price movement.
3. drewster said...
HV,
Sorry you're right, it wasn't the surveyors' fault. The fault lies in the interpretation of the value - I wonder if Prudential, who are less experienced in the housing market than most banks & building societies, have taken into account the possibility of falls. It's something that their pension-holders might want to be aware of!
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