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The UK prudential regulation authority’s valuation principles for equity release

Author

Listed:
  • Dean BUCKNER
  • Kevin DOWD

    (Durham University Business School)

Abstract

In recent years the UK Prudential Regulation Authority has been involved in an ongoing discussion with equity release firms over the principles to be used in the valuation of equity release mortgages. The UK regulator proposed a set of such principles in its Supervisory Statement SS 3/17. These principles mark a major step forward in equity release valuation methodology. They are based on elementary pricing economics, their validity is easily established and they are easy to apply. They can be used to provide a cross-check on any proposed set of valuations and so test the reliability of the underlying valuation model or its calibration.

Suggested Citation

  • Dean BUCKNER & Kevin DOWD, 2022. "The UK prudential regulation authority’s valuation principles for equity release," Turkish Economic Review, EconSciences Journals, vol. 9(1), pages 1-14, March.
    • Handle: RePEc:cvv:journ2:v:9:y:2022:i:1:p:1-14
    as

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    References listed on IDEAS

    as
    1. Black, Fischer, 1976. "The pricing of commodity contracts," Journal of Financial Economics, Elsevier, vol. 3(1-2), pages 167-179.
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    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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