Bradford & Bingley mortgages show unexpected growth

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Bradford & Bingley mortgages show unexpected growth

Three times as many equity release mortgages were sold in 2004 than was anticipated, it has emerged today from Bradford & Bingley mortgages.

Mortgage Express, the specialist lending arm of Bradford & Bingley, found that 30 per cent of the mortgage intermediary market was taken up by equity release, also known as lifetime mortgages, having expected it to account for just ten.

Moreover it predicted a rosy future for the sector.

"The overall lifetime mortgage market saw modest growth throughout 2004. The outlook for 2005 is very positive - we expect the market to benefit from recent FSA regulation, and in turn to grow by 30 per cent, " said Roger Hillier, product development manager at Mortgage Express.

Equity release products offer people over 55 access to some or all of the value of their home, without selling it or making interest payments. These products can provide a lump sum or a regular monthly income, in return for a share of a property - redeemable when it is sold or when the property holder dies.

With recent surges in property prices, and the poor performance of the pensions sector, equity release is fast gaining popularity.

But there are risks in looking to equity withdrawal mortgages to supplement pension plans, according to the Financial Services Authority's Financial Risk Outlook 2005, which details the risks facing the financial sector and its customers.

The Actuarial Profession added that while the housing wealth of those over 65 stands at around £1.1 trillion, equity release mechanisms must be used cautiously in funding peoples' retirements.

Ged Hosty, chairman of the Actuarial Profession's equity release working party, cautioned: "Since it is likely to be the last major financial transaction anybody enters into, it is essential that everybody considering such a step makes sure they are fully aware of the financial and other implications before committing themselves."

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