The building society is to close its Newcastle Building Society Equity Release Service (NBSERS), resulting in the loss of five jobs.

The lender – which has offered advice on lifetime mortgages and home reversions
since 2006 – made the decision due to the “considerable contraction” in the equity
release sector.

The news comes less than two months after equity release adviser In Retirement
Services entered into administration, and just three weeks after Coventry Building
Society suspended its product range.

Wendy Lee, commercial director of Newcastle Building Society, said the advice
service was not a viable proposition in the current market conditions.

She added: “However, we would expect this to reverse as the economy recovers. We will
monitor the market, with a view to being able to offer this service again, should market
conditions make it viable.”

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Mike Penn, head of sales at Stonehaven Equity Release, said it was disappointed by
the news, as the demand for advice in equity release was high.

He added: “Providers want consumers to have access to good quality advice, so the
departure of any broker from the sector is disappointing. It is even worse because
advice which is available through a respected building society would be popular with
customers.”

Duncan Young, chief executive of Retirement Plus, a firm that has also withdrawn
from new business in the sector, said it feared that more brokers would depart
the market as the outlook for equity release remained challenging.

He continued: “The broker market has been hit by a lack of funds and the departure
of providers in recent months. A lot of intermediaries piled into the equity release market when it was doing well, which inflated the sector. They are now feeling the effects of the difficult situation which the lenders find themselves in.”