Research firm Canstar Cannex is putting its reverse mortgage star ratings program on hold due to the downturn in the reverse mortgage marketplace.
The firm attributed the withdrawal of reverse mortgage lenders to the global credit crisis and said that in the last six months eight reverse mortgage lenders have opted out of offering new loans.
"Funding your retirement by cashing in on the equity built up in the family home may now be more difficult than anticipated," Canstar Cannex said in a statement.
According to the company's senior financial analyst, Harry Senlitonga, the industry is seeing reverse mortgages fall victim to the funding shortfalls currently being experienced by financial institutions.
"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," Senlitonga said.
"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."
There are still many excellent products on the market for those interested in a reverse mortgage and Senlitonga said lenders suspending products from the market are likely to reinstate them when financial times improve.
Canstar Cannex said customers with existing reverse mortgages can expect a continuation of service to their loans, with the only visible difference being that lenders have withdrawn from offering reverse mortgages to new customers.
The company said it will keep watching the reverse mortgage product sector and will resume researching and star rating when the time is right.
