Housing dip 'could affect equity release'

Equity release schemes could be strongly affected by the housing slump, should the UK continue to talk itself into a long-term crisis, experts have claimed.

Insurance specialist Norwich Union claimed that the UK was talking itself into a deeper housing crisis by using the word 'slump', but said that it was too early for price drops to have as major an effect on equity release as on mortgages.

Equity release schemes are used by many retirees to tap into the value of their home and borrow money against its value, with the insurer claiming that a deeper housing slump could snare equity release holders as well as others.

Anthony Rafferty, head of marketing post retirement for Norwich Union, said: "We are a nation talking ourselves into a housing market slump by using the word slump."

He added that a protracted drop in house value could see problems for those already signed up to equity release products, but claimed that "it's too early to say what impact the housing slump will have on equity release customers".

Uncertainty over the direction of house prices and the value of mortgages purchased in the current climate are leading many to rent instead of buy, especially in London, where housing prices exceed national averages.

News posted on 17th December, 2007