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With the way things are at the moment are the lenders going to stay in the market to offer equity release products? Will the banks want to tie up their money into these products? Paul Barnes, Halcyon, Stratford Upon Avon.

Jon King, Hodge Equity Release, Cardiff.

Dear Paul,

Equity release is certainly a long-term commitment from the lenders' perspective. Having said this if the product design is correct and the credit risk and longevity are properly accounted for it can be regarded as an attractive lending proposition.

After all, the mortgage is likely to be redeemed in 10, 15 or even 20 years from now and does not require a regular income to service the interest payments. For this reason, equity release lenders have not withdrawn from the market and indeed there have been new entrants to the market during the period of the credit crunch. Rates have remained competitive and when compared with mainstream lending can be seen as extremely good value in historical terms. Most products offer a fixed for life rate, which of course gives the client maximum peace of mind. I expect funds will be readily available for these products and advisers can proceed with confidence when making recommendations to clients.

Richard Eagling, Moneyfacts, Norwich.

Dear Paul,

Unlike the mainstream mortgage market, the equity release sector has proven pretty resilient to the ongoing credit crisis. Since equity release lending is based on a long-term risk assessment, any immediate changes in the housing market or economic expectations are unlikely to have a major impact on product pricing making it a more stable market.

Most providers borrow money on the long-term swap rate market rather than using funding based on Libor. Indeed, some of the recent changes that have occurred within the lifetime mortgage market fly in the face of what has been happening in the rest of the mortgage world. Neither a significant shift in the ability of equity release providers to lend nor a dramatic reappraisal of interest rates has been apparent. During the latter part of last year, when conventional mortgage lenders were rapidly increasing interest rates on their products in response to increased costs of funding, movements in the interest rates of lifetime mortgages were downwards with the one notable and understandable exception being Northern Rock.

Some providers have also seen a relaxation in their loan-to-value amounts, allowing potential clients to release more equity from their homes than before. More recently we have seen the average annualised rate on fixed rate lifetime mortgages increase to 6.92 per cent, up from 6.6 per cent at the same time last year. However, this is a small rise when put in context with the increases seen in the conventional mortgage market. One disappointing aspect of the past year has been the lack of new entrants into the equity release sector.

With LV= having come into the market on the back of its acquisition of Tomorrow, only Godiva Mortgages can truly be considered a new entrant when it launched its lifetime mortgage products at the end of February 2008. The blame for the lack of activity can probably be laid at the door of the credit crunch with potential entrants perhaps having to concentrate their efforts on fighting fires elsewhere in their business.

Keith Haggart, Prudential, London

Dear Paul,

The current funding crisis in the wider mortgage market has had an impact on the options available to lifetime mortgage providers, especially in relation to securitisation. However many of those providers have access to alternative internal funding sources such as, but not exclusively, annuities.

This is giving stability to the market and so far none of the current lifetime mortgage providers, with the exception of Partnership, have felt it necessary to withdraw products or change terms on loan-to-values. The equity release market is rather more insulated against market slowdown. As access to alternative sources of personal finance reduce, either in the form of mortgage loans or the ability to release equity through downsizing, it could be argued equity release providers will benefit from an increase in sales as the alternatives available to consumers are reduced.

Rather than seeing a reduction in providers operating in the lifetime mortgage market, we are in fact seeing the number increase and in many cases they are offering more competitive terms. This is clearly driven by the perceived opportunity. The fact people will need ways of financing a longer and more active retirement is part of this market growth.

Jason Clarke, Skipton Building Sociey, North Yorkshire

Dear Paul,

Equity release is not a market that Skipton operates in currently but that does not mean we are not watching it closely. When you look at the size of the market, even without home reversions, then there is steady growth. Add in the question mark still hanging over pensions and you can foresee this being a market that forms a more fundamental part of mortgage business in years to come.

The credit crunch itself probably has no greater impact on a lender's view of equity release than on any other mortgage product as all mortgage lending is cash-hungry. If anything the lower loan-to-values and its longer-term nature may even make it more attractive. One factor that may influence this view is house prices.

There seems to be little consensus on prices in the next two to three years with doom and gloom on one side and relative optimism on the other. However, the unparalleled growth of the last 10 years and the long-term view mean even the most pessimistic outcome is unlikely to impact too heavily on the equity release market.