- Prudential argues that Home Reversion Plans should be included to avoid confusion
- 46% of 55+ year olds who have a mortgage or own their own home would be more likely to consider equity release if the market was properly regulated
Lifetime mortgages will be regulated by the Financial Services Authority (FSA) from October 2004 and the latest research from Pru reveals that consumer confidence in this market is likely to increase with the arrival of regulation. In particular the number of those over 55 with a mortgage who would consider equity release, if regulated, has nearly tripled to 31%1.
The number of people releasing equity from their home in retirement has already doubled in the past year to around 300,0001. With rising house prices set against pension uncertainty and lacklustre stock markets, Prudential says demand is set to increase yet further and predicts the market could grow to £6.8bn by 2008.
However Prudential is concerned that there will be consumer confusion since Home Reversion plans are not included in the forthcoming regulation.
Ali Crossley, Director responsible for Pru's Equity Release Plans, said: "The Bank of England figures out last Friday (1st April) show that record amounts of equity is being released in homes, reaching a staggering £16.2 billion in the fourth quarter of last year. We believe that this trend is set to increase with the imminent arrival of regulation upping people's confidence in the equity release market as a whole.
"However, Home Reversion plans currently sit outside the proposed regulatory regime since they are not classed as mortgages and we're concerned that there is a danger that people will be unable to distinguish between regulated and unregulated products. We believe the whole market should be regulated."
For further information on the Prudential Home Equity Release Plan, consumers should call 0845 600 1564 for more information, or visit www.pru.co.uk
