Stonehaven suspends equity release lending

Equity release provider Stonehaven has temporarily suspended all new lending.

Stonehaven, who has offered lifetime mortgages since August 2006, has pledged to honour applications which are received in the next four weeks.

It 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 says: "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 2009, several lenders, including Coventry Building Society, Saffron Building Society and Northern Rock, either suspended equity release lending or withdrew completely from the sector.

Peter Welch, head of sales and distribution at provider Bridgewater Equity Release, says Stonehaven's decision was unsurprising given the growing funding challenges which lifetime mortgage providers are facing.

He explains: "The open-ended nature of this announcement shows 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."

"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 many providers are having in accessing funding are much more acute in the lifetime mortgage product arena than in home reversions," Welch adds.