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Stonehaven ER exit brings market fears

by: Mortgage Solutions
  • 15/03/2010
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Stonehaven’s decision to suspend its equity release offering temporarily has sparked fears that funding constraints could prompt other providers to follow suit.

Last week, the lifetime mortgage lender– which entered the sector in August 2006 – pulled its equity release range, citing funding problems for its decision.

Its exit is yet another significant blow for the sector, which has seen providers including Prudential, Coventry Building Society and Northern Rock either suspend lending or withdraw.

Stonehaven has pledged to honour applications which are received in the next four weeks and has extended its completion deadline from three to six months. Existing customers will not be affected.

A message on its website said: “Stonehaven remains committed to this market and hopes to return when the funding market improves.”

Stuart Wilson, managing partner at Equity Advice, said he was unsurprised by the decision, given the funding challenges which equity release providers are facing.

He added: “Funding for lifetime mortgages is increasingly harder to justify, because providers need capital for a long period of time without a quick return on investment. Other lenders may still be affected. A lack of providers will affect brokers because we will not have a wide range of products at our disposal to advise on.”

Dean Mirfin, group development director at Key Retirement Solutions, said he hoped the lender would focus strongly on accessing funding during its temporary exit.

He added: “Stonehaven offered innovative products and it will be missed by the market. With lenders pulling out, the need for advice is more vital than ever.”

Andrea Rozario, director-general at Safe Home Income Plans said the departure was indicative of the current market conditions. She added: “It is a shame that it has temporarily departed, and the market will miss its contribution. However, there are numerous equity release products still available, and we believe there will be new entrants this year.”

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