Duncan Young, managing director of Retirement Plus, says the number of applications it was receiving outweighed its funding line.
He says: “We thought the funding was going to come through on time. We didn’t want to suspend lending but had no choice.”
Young cannot put a timescale of when funding will reappear, but says it will be a while. Retirement Plus will honour cases where offers have been issued and process them to completion. It will also refund valuation fees on cases submitted but not offered.
Safe Home Income Plans says only time will tell whether other equity release providers will have similar problems.
But Andrea Rozario, director-general of SHIP, says: “The equity release market has not been hit too badly. It remains to be seen whether Retirement Plus’ funding issue will be short term but there are other providers offering reversion plans.”
The equity release market has been relatively bullet-proof against the recession, but in recent months holes have started to emerge.
Key Retirement Solutions’ equity release market monitor for Q1 2009 recently showed a dramatic drop in the equity release market compared with the same per-iod in 2008.
It showed that a 7% drop in plans and a 16% drop in property prices has resulted in a fall in lending for the sector of almost 24%.
This is the largest fall KRS has recorded since it began monitoring the sector in 1998.