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Saffron latest to pull out of equity release

Saffron Building Society has become the latest equity release provider to temporarily pull out of the sector.

The provider has chosen to pull its lifetime mortgage range for the rest of the year after it reached a satisfactory level of lending.

Saffron Building Society sales and marketing director John Eastgate says: “We have temporarily withdrawn from lending in the equity release market.

“This follows a very successful year of lending in which 2009 targets have now been met. Withdrawing from the market at this time will ensure that Saffron’s lending portfolio remains balanced and within our lending strategy. This careful portfolio management is key to retaining Saffron’s strong capital position and is therefore in the best interests of our members.”

This comes after both Coventry Building Society and Retirement Plus revealed they were to temporarily cease equity release lending. Newcastle Building Society and In Retirement Services have also ceased doing business over the last two months.

Key Retirement Solutions group director Dean Mirfin says: “This seems similar to what happened in the sub-prime sector last year – as the smaller lenders pulled out, the remaining sub-prime lenders had to take action so as to avoid being over-awed by business.

“As in the case of Coventry, I am guessing that Saffron had to decide to either increase its rates or to cease lending. Any slight change in the market affects these smaller providers too much and they have to take drastic action.”

Saffron says it will review its equity release options in 2010.



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