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The Eumaeus Guide to Equity Release Valuation

Author

Listed:
  • Dean Buckner

    (The Eumaeus Project, UK)

  • Kevin Dowd

    (Durham University, UK.)

Abstract

The UK equity release sector is permeated by poor valuation practice: as far as we are aware, not a single equity release firm is valuing its No-Negative Equity Guarantees (NNEGs) in a scientifically valid manner.This NNEG under-valuation problem is on a large scale and implies correspondingly large over-valuations of Equity Release Mortgages (ERMs).The Discounted Projection or ‘Real World’ approach used by the equity release industry is inherently flawed and produces valuations that violate bounds that are known to be inviolable.The only scientifically valid valuation approach is the Market Consistent approach, which is also the only approach compatible with accounting principles and technical actuarial standards.This manual provides a guide that explains how NNEGs and ERM should (and should not) be valued.

Suggested Citation

  • Dean Buckner & Kevin Dowd, 2022. "The Eumaeus Guide to Equity Release Valuation," EconSciences Library Books, EconSciences Library Books, edition 1, number 978-625-7501-76-7, July.
    • Handle: RePEc:cvv:eslbks:978-625-7501-76-7
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    JEL classification:

    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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