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Shake-up predicted in equity-release underwriting

Partnership Home Loans is forecasting a radical shake-up of the equity-release market with life expectancy assessed by health and medical history rather than just age.

The firm says 40 per cent of the market will eventually see plans underwritten in this way. Providers currently determine life expectancy based on a person’s age and not on medical condition.

The prediction comes after Partnership launched what it describes as the UK’s first fully medically underwritten reversion scheme in April. It plans to offer a similar lifetime mortgage proposition in the second half of this year. It says it opted for reversions first as volumes are lower and it did not want to become swamped by enquiries immediately after launching.

Partnership points to the successful transition to fully medically underwritten schemes in the annuity market as a reason for its optimism.

Chief finance officer Steve Groves says: “I cannot see any reason why this will not take off. It will be 40 per cent of the equity-release market. If you look at the pension annuity market, it has snowballed after making this transition. We have started this on reversions and we will roll it out to lifetime mortgages.”

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