Abbey National is piloting a scheme to reap the latent rewards in the equity release market, which has a potential value of up to £7bn but is currently worth £750m.
The bank is set to pilot a roll-up product in the South East of England in the coming weeks, although a spokeswoman for the bank could not be more specific on timing. She said a national roll-out would depend on the pilot’s success, but was unable to release target revenue for the project.
The scheme will be available to those aged 60 and over and allow them to release between 10% and 50% of the value of their homes. Maximum and minimum loan values will be £250,000 and £25,000 and it is expected the interest rate will be set at around 7%. The equity release market has attracted much interest over the last year. Northern Rock is also planning a major assault on the market in the coming year, and has called for more lenders to come into the sector to improve competition and choice.
Abbey National has also attracted attention for its suspected sale of consumer credit arm, First National. Reports in the media have suggested the bank has been unable to sell the division as a whole. It is comprised of a point of sale credit operation, a motor finance division and a sub-prime mortgage operation.
An Abbey spokesman would only say: ‘We are looking at non-core asset disposals and what will be part of our UK personal finance operation will be outlined with our full results on 26 February.’