This year will see a significant slowdown in equity-release new business due to the impact of statutory regulation, according to Safe Home Income Plans chairman Jon King.
Despite widespread estimates of a potential market size of £50bn-£100bn, just £498m was borrowed in the first half of 2003. King believes the onset of mortgage regulation in October heralds so much work for providers that they are looking to slow down equity release business rather than increase it.
Stroud and Swindon Building Society has closed its books to equity-release new business at least until the onset of regulation and Chesham Building Society withdrew its equity-release product last week.
King says: “Equity-release new business is not going to be rip-roaring this year, it will be taking a breather. Once regulation is sorted out, I expect growth to pick up again but it will be a lot smaller this year.”
Charcol senior technical manager Ray Boulger says: “I would agree 100 per cent. Any increases this year will be fairly modest. Mortgage Express's entrance into the market has meant that Norwich Union is doing less business this year and while Northern Rock is still seeing steady business, there are no huge increases as there have been in previous years.”
Stroud and Swindon Building Society spokesman David Greenleaf says: “We hope that once we are through regulation we will be able to re-enter the equity-release market.”
Charcol general manager Ricky Okey says both the firm and B&B have benefited from their link-up but he is looking forward to returning to Charcol's entrepreneurial roots