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Legal and General targeting £500m of equity release lending this year

  • 09/08/2016
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Legal and General targeting £500m of equity release lending this year
Legal & General (L&G) plans to lend £500m of equity release this year, reporting lending of £231m in the first half.

In March this year, L&G predicted lifetime mortgage sales will hit £2.3bn by 2019 with the insurer effectively reshaping the market after signing a five-year deal with Santander likely to result in £100m of loans a year.

L&G bought Newlife Home Finance in 2015, launched a lender and completed £201m of equity release sales in 2015, targeting a quarter of the lending market this year.

The lifetime mortgage market grew 24% in H1 2016 to £934m and is on track to exceed £2bn for the first time in 2016, said L&G.

CEO Nigel Wilson said L&G is working towards five established long-term growth drivers: ageing populations; globalisation of asset markets; creating real assets; welfare reform; and digital.

Wilson said: “We will remain disciplined in the deployment of our capital, selecting the opportunities that deliver the best return on capital across annuity and longevity transactions.”

He continued saying market volatility after the EU Referendum is likely to continue for some time.

“Although no business model can be immunised against slowing global economic activity, the opportunities available to the Group should remain largely unchanged and we will strive to execute our strategy successfully to deliver profitable growth.”

Meanwhile, the Legal & General Mortgage Club facilitated £26bn of mortgages in H1 2016 against £20bn in the same period last year. The Club said its partnerships with over 9,000 mortgage brokers made it the largest participant in the intermediated mortgage market in the UK and involved in one in five of all UK mortgage transactions.

Legal & General Surveying Services continues to deliver a strong performance, completing over 250,000 surveys, 10,000 up on the same period in 2015.

L&G H1 profit rose to £822m with a dividend payout to shareholders of 4p.

Graham Spooner, investment research analyst at The Share Centre, said: “Legal & General continues to extract shareholder value as it sees return on equity continue to rise, cash generation grow and shareholder profits before tax increase by 23%, while also maintaining a strong balance sheet.”

The insurer’s Return on Equity is at 20.4% up from 19.1% last year.

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