The equity release market has been given a boost by Just Retirement, which has pledged to remain in the sector, following the withdrawal of Prudential.
Prudential – which employs 140 staff on its lifetime mortgages arm and accounted for 23 per cent of all funding in the market last year – confirmed it would be exiting equity release yesterday, although its existing customers will not be affected.
"We are naturally disappointed that Prudential has decided to withdraw from the equity release market. In the current economy finding sufficient funding is an issue that many organisations face and this shows that equity release is not immune to these issues," said Andrea Rozario, director general of SHIP, the equity release industry body.
"However, with the UK's over 65 currently sitting on £907 billion worth of equity in their homes and many struggling with insufficient pension income, we firmly believe that there is a strong market for this product – now and in the future."
The market has been severely depleted in recent times, with Coventry Building Society, Saffron Building Society, Northern Rock and Retirement Plus all suspending new lending or closing their equity release operations entirely.
However, Just Retirement has said it will not follow suit, insisting the business is committed to the market and is confident of its long term prospects.
Traditionally, equity release mortgages have allowed homeowners, particularly elder people, to release a percentage of their property's value as a cash lump sum or to provide a regular income.
However, the credit crisis has seen a marked contraction in the market, leaving Aviva, Just Retirement and LV= as the remaining household names.
"While Prudential may have decided to leave the equity release market, Aviva is fully committed to growing its share of this exciting sector," said Clive Bolton, director, annuity business and equity release at Aviva
"The industry has seen sales of over £714 million thus far in 2009 and we believe that the market will continue to grow."
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