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Retail-funded providers to take over lifetime lead

Retail-deposit-funded equity-release providers could start to take charge of the lifetime mortgage sector next year.

Retirement Plus managing director Duncan Young says the credit crunch has led to annuity-funded providers looking elsewhere for investments.

He says: “Annuity-funded lifetimes did well in 2008 but I have my doubts about their dominance in 2009.

“Funding an annuity book means investing in various assets, including lifetime mortgages, but because of the credit crunch, things like corporate bonds are looking more app- etising so lifetime providers funded by annuities might lose their edge in 2009.”

Key Retirement Solutions business development manager Dean Mirfin says: “Annuity funds look at the risk of their investments and they have to be sure that it all stacks up.

“The big pressure for them in 2009 is what happens to property prices. If they continue to fall, they obviously affect lifetime mortgages and the risk of investing in them.

“Providers funded by retail investment do not have that pressure so they could become more aggressive in the sector. Of course, they have other pressures to consider so only time will tell.”

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