Stonehaven, who has provided lifetime mortgages since August 2006, has pledged to honour applications which are received in the next four weeks.
It has also extended its completion deadline from three months to six months and said existing lifetime mortgage customers will not be affected by the decision.
A message on its website said: “Stonehaven remains committed to this market and hopes to return when the funding market improves.”
No further details have yet been made available. The news will come as a futher blow to the beleaguered sector.
In 2008, several lenders, including Coventry Building Society, Saffron Building Society and Northern Rock, either suspended equity release lending or withdrew from the sector.
Peter Welch, head of sales and distribution at provider Bridgewater Equity Release, said Stonehaven’s decision was unsurprising given the growing funding challenges which lifetime mortgage providers are facing.
He explained: “Over the course of the past year we have seen a number of providers leave the lifetime mortgage sector because of the difficulty in securing the necessary finance to continue lending. We believe the problems that many providers are having in accessing funding are much more acute in the lifetime mortgage product arena than in home reversions.”
However, he added: “The open-ended nature of this announcement shows that sources of lifetime mortgage funding are currently at a premium and it is therefore difficult to put a timescale on when these lines will be open again.”
