Introducing equity release products in Malta : an analysis

Abstract

The introduction of new banking products tends to be very sparse locally. In this study, the introduction of a new financial product that would possibly be relevant to the context of the Maltese islands will be discussed in detail. This product, which is used in a very common manner abroad, is the Equity Release Product. An Equity Release Product, or ERP, primarily allows the home owner to release part of their property to the credit or financial institution in exchange for cash through a legal contract. Although legislation was legally passed five years ago, no bank seems to have shown interest in the introduction of this product yet. This study will seek to find out why this has been the case and will also entail delving deeper to understand the banks’ position on the subject matter. It will also seek to better understand the banks’ rationale, in spite of the fact that the Maltese locals tend to be home owners, with the ownership of several properties also not being uncommon. Finally, this study will seek to discover possible solutions on the way this product may be introduced and lessons which one needs to note from other countries.