Nationwide to enter equity release market

The lender is reportedly exploring ways to help parents pass wealth on to children, and to help homeowners unlock the wealth tied up in their property.

The Times reported that the Society is planning on developing a new 'safer' equity release product, with no access charges and a no negative equity guarantee.

Group Retail Director, Chris Rhodes, said that Nationwide was looking at 'how you can transfer wealth from parents to children', but that a product was not yet ready for launch.

He added: "There is a clear customer need. We are trying to crack the problem and we are in the research and development phase."

Dean Mirfin, Technical Director at Key Retirement, commented: “It is good to see the acknowledgement from Nationwide of the increasing role that parents and grandparents have in helping their children and grandchildren get onto the property ladder, which is a popular use for equity release.

“The mention that products will have no negative equity guarantees is no different to those currently available through the Equity Release Council, which already carry the same guarantee.

“The issue about existing schemes being viewed as expensive also comes at a time when for many rates less than 5% fixed for life are available as well as a variable rate option priced currently at 2.96%. As a result it will be interesting to see the structure of what Nationwide proposes against those currently available as well as to how they will be distributed.”

Alice Watson, Product and Communications Manager at Retirement Advantage, added: “New entrants to the equity release market provide welcome competition and spur product innovation, which ultimately benefits consumers and grows the size of the market. Nationwide is right to say that developing products which are safe and secure is important.

“However, the truth is the equity release market already offers a raft of products which provide safety, flexibility and comfort to customers.

“There are still misconceptions around the equity release industry. Many remember how it was a decade or more ago, and question whether it is a viable option for retirees today. The truth is that this is an industry which has grown and matured at a rapid rate, and far from being a last resort option it is a proactive and well planned income choice for over-55s up and down the country.”