Home Equity Release May Cost Pension Firms Billions

UK pension companies may be harbouring billions of pounds of losses from home equity release loans. Under equity release, homeowners borrow money against their house's value and don't repay anything until it's sold. That's fine for the borrower, but there are fears lenders have underestimated how much these loans could cost them. At least one firm assumes house prices will rise 4.25% a year. If they don't, firms face losses - or even bailouts. Pensioners whose firms invest in the loans would be protected through the Financial Services Compensation Scheme (FSCS) which is funded through a levy on the industry meaning losses would be ultimately borne by all pension holders. Read more on the BBC website.

https://www.bbc.com/news/business-44992836