The product will have a no negative equity guarantee and a fixed interest fee without access charges or penalties.
Nationwide will launch into the equity release market with a ‘safer’ range of products, The Times has reported.
The product will have a no negative equity guarantee and a fixed interest fee without access charges or penalties.
Chris Rhodes, Nationwide's group retail director, told the paper: “There is a clear customer need. We are trying to crack the problem and we are in the research and development phase."
He added: “We want a decent fixed interest rate, without access charges or penalties which make it a product that destroys value when they exit [for example] to go into care, and has a no negative equity guarantee so ultimately you never end up repossessed in any way.”
Yesterday Nationwide’s annual results revealed that the lender increased its gross mortgage lending by 20% to reach £32.6bn in the year to 4 April 2016, up from £27.1bn the year before.
However the society’s chief executive Joe Garner, who joined from BT in April, said he expected profit to “moderate” in the year ahead due to increased competition in the mortgage market, adding that the EU referendum will curb activity.
Dean Mirfin, technical director at Key Retirement, said:“It is good to see the acknowledgement from Nationwide of the increasing role that parents and grandparents have in helping their children and grandchildren get onto the property ladder, which is a popular use for equity release.
“The mention that products will have no negative equity guarantees is no different to those currently available through the Equity Release Council, which already carry the same guarantee.
“The issue about existing schemes being viewed as expensive also comes at a time when for many rates less than 5% fixed for life are available as well as a variable rate option priced currently at 2.96%. As a result 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.”
Bernie Hickman, managing director, Legal & General Individual Retirement, added:“We are pleased to see a big name in the form of Nationwide planning to offer a range of retirement lending solutions. Clearly more mainstream lenders are responding to the rising demand for products like lifetime mortgages, as a growing number of people entering retirement look to use the equity tied up in their home to fund later life, undertake much-needed home renovations or even help their loved ones onto the property ladder.
“This is a positive move for the retirement lending market, as it will drive value-for-money and innovation. At the same time we want to see even more lenders talking positively about the benefits of releasing equity. That way, we can ensure even more consumers are made aware of the huge difference these products can make for the right people, in the right place at the right time.”
