Phil Heaton-Jones, head of mortgage product management and consulting comments:“Equity release is a huge opportunity for life and pensions providers as well as existing mortgage lenders. Our equity release outsourcing service can offer life companies easy access to this sector and enable them to take advantage of the trend for the growing elderly population to release equity from their homes in order to fund retirement.”
Marlborough Stirling believes that increasing numbers of life and pension companies will be equipping their distributors with a lifetime mortgage proposition to cater for the increasing demand for equity release products, with the added comfort that lifetime products are to become regulated by the FSA in October 2004. This will enable both tied advisers and independent intermediaries to advise on how to unlock equity tied up in a client’s property and, importantly, what to do with the equity once released.
The new equity release outsourcing service, designed by Marlborough Stirling Mortgage Services, provides life companies with quick, easy and cost effective entry to the market by managing all elements of the sales and servicing chain on their behalf. The services are seamlessly integrated to provide a straight through processing system that encompasses distribution via the recently launched equity release trading platform on the Exweb portal, new business application processing and ongoing administration of equity release products.
Although the equity release mortgage market is still small, it is developing rapidly. Figures from the CML show that 25,000 lifetime mortgages (worth £1 billion) were advanced in 2003. This was a 53% increase over 2002 with 16,300 advances (worth £655 million). However Marlborough Stirling believes the 2003 figure represents a fraction of the potential market based on the CML’s recent analysis of housing equity (assuming that the average loan advanced would be for 25% of the value of the property).
In addition to this, research carried out by Marlborough Stirling’s subsidiary business The Exchange shows that Equity Release is growing in popularity in the intermediary sector. Whilst only 40% of the 500 IFAs surveyed had sold an Equity Release product within the last 12 months, as many as 84% said they are now considering offering advice in this area.
Phil Heaton-Jones continues:
“Older homeowners are beginning to tap into their housing equity to fund a more financially secure old age. This provides a perfect opportunity for life and pensions companies to advise on both how to release equity from a property and what to do with it once it is released. Marlborough Stirling offers a cost effective and professional service which will give life and pensions companies quick access into a new and rapidly expanding market.”
