View more on these topics

Prudential to slash equity release LTVs by 5%

Prudential is slashing the maximum LTV on its lump sum lifetime mortgages by 5 per cent due to predictions of falling house prices.

Prudential, like most equity release providers, offers a negative equity guarantee and so it says this step is necessary in order to maintain prudent lending during a period in which house prices are predicted to fall by up to 25 per cent.

From next Friday, the maximum LTV for lump sum lifetime mortgages will be 35 per cent, down from 40 per cent, but drawdown LTVs will remain unchanged.

Prudential has staggered maximum LTVs for each age group and these will all be reduced by 5 per cent as well, so that a 65-year old will now have a maximum LTV 0f 20 per cent instead of 25 per cent.

Prudential director of lifetime mortgages Keith Haggart says that in the last house price crash in the early 1990s house prices in the South East fell by as much as 35 per cent and he would not be surprised to see this happen again.

Haggart says: “The equity release market needs to realign itself and we believe this is a prudent step.”

Prudential says it will honour pipeline cases submitted up until next Friday.

Recommended

Bank chiefs Goodwin and Hornby depart

The chairmen and chief executives of two of Scotland’s leading banks have announced their intentions to step down this morning following the unveiling of the £37bn bail-out.

GuestInvest may hit Aegon Sipp clients

Aegon says a small number of clients that invested in GuestInvest hotel rooms through its Sipp could be affected by the company filing for administration.

Dubai

White paper — Dubai International Insights

Jelf Employee Benefits discusses the legislative changes in Dubai, available medical facilities and policy considerations for employers with expatriate workforces in the country. This edition will be of particular interest to global human resource directors, compensation and benefits specialists and mobility managers who have employee populations in Dubai, or are considering operating there in the near future.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment