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Coventry pulls out of equity-release sales

Coventry Building Society suspended equity-release lending last week, blaming increased costs.

As revealed by Money Marketing.co.uk, the society told advisers on Thursday that it would be withdrawing its current lifetime mortgage range through its intermediary arm Godiva and would not be replacing it for the foreseeable future.

The move came comes after the building society posted profits for the first half of this year of £36.2m, up by 2 per cent from £35.5m in the first half of 2008.

A Coventry spokesman says the mutual is reviewing the cost of equity-release lending but could not put a date on a return to the market. He says it “may be some time” before a new range of products are released.

He says: “We remain dedicated to the industry and are still a full member of Safe Homes Income Plans. We will also carry on servicing existing clients.”

Retirement Plus managing director Duncan Young says the market withdrawal comes as no surprise: “It is phenom-enally difficult for a retail deposit lender to fund a 30-year or 40-year mortgage.”

Many people in the industry hailed Coventry’s equity-release products as innovative. Its lifetime loan had no early redemption charge, which was unique to the market.

Young says: “Coventry brought something new to the market and allowed advisers to see lifetime mortgages as a financial planning tool rather than a final mortgage.”

Key Retirement Solutions group director Dean Mirfin believes that this is not the end of Coventry’s equity-release propositionHe says: “This decision may be more to do with the fact that Coventry is a building society. Building societies are all about value, so if they cannot show value within their pricing, they may not want to sell at all while funding is so expensive.”

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