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‘Pru lifetime cut does not go far enough’

Prudential has been criticised for failing to lower its lifetime mortgage rate below the 6 per cent threshold.

The firm cut the head- line rate on its equity-release product from 6.45 per cent to 6.02 per cent last week but many believe the reduction did not go far enough. GE Life says Pru is still behind it in the market, with GE offering a 5.89 per cent annual rate.

GE equity-release product manager Simon Little says: “They are trying to catch up with us, given that their annual rate on 6.02 per cent is actually 6.19 per cent. That rate begs the question of how serious they are. We welcome more competitors bringing their prices down to join us.”

Pru has promised advi- sers that they will earn an additional 450 on top of commission on sales even if the customer draws down only the minimum amount.

John Charcol technical director Ray Boulger says the price war in the lifetime sector may be coming to an end as many lenders are thought to have reached their lowest point but he believes that Pru has missed a marketing opportunity.

He says: “You would think they would have gone to 5.99 per cent for marketing reasons as it makes it easier to sell. I suspect that they are disappointed at the volume of business coming in.”

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