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The Equity Release Trap

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BBC Radio 4 - The Equity Release Trap

Are insurers taking too many risks with equity release?

Equity release is a popular way to fund retirement, but some say lenders are not properly accounting for the risks. Howard Mustoe reports.

In recent years equity release has become the fastest-growing way for older homeowners to fund their retirement. And it's easy to see why.  

Customers can borrow tens or hundreds of thousands of pounds secured against their home, with a guarantee they will never owe more than its value. This means they can never go into negative equity, no matter how long they live or what happens to house prices. 

But while the equity release industry has made sure that the customer is shielded from financial risk, it leaves the lenders exposed.

In the Equity Release Trap, Howard Mustoe investigates whether equity release providers are properly accounting for the guarantees they offer borrowers, and looks into concerns that the industry is making over-optimistic bets on the housing market. Plus, Howard speaks to a whistleblower from the regulator at the Bank of England, about accounting rules that could be making insurance companies look healthier than they actually are.

Reporter: Howard Mustoe
Producer: Marie Keyworth
Editor: Andrew Smith

First broadcast in August 2018

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