Funding retirement with a reverse mortgage may now prove more difficult with eight reverse mortgage lenders opting out of offering new loans, according to research firm Canstar Cannex.
Canstar attributed the eight withdrawals of reverse mortgage lenders in the space of six months to the global credit crisis.
“Unfortunately, we are seeing reverse mortgages fall victim to the funding shortfalls financial institutions are currently experiencing,” said Canstar senior financial analyst Harry Senlitonga.
However, he said although many lenders are suspending products from the market they are likely to reinstate those products when financial times improve.
According to Canstar, customers with existing reverse mortgages can expect a continuation of service to their loans.
As a result of this temporary downturn in the reverse mortgage marketplace, Canstar is putting its reverse mortgage star ratings program on hold.
“When we first started researching and rating reverse mortgages in October 2007 this was an innovative product gaining momentum and making inroads in the areas of consumer recognition and acceptance.
“Unfortunately, the financial meltdown hit this specialist lending area hard as lenders tried desperately to shore up funding, with many eventually being forced to shelve plans,” Senlitonga said.
