The reverse mortgage market is in the doldrums, following the withdrawal from the market by one lender and sharp cutbacks by a couple of others. And brokers report that while there is still demand from people who need access to funds, applications from so-called lifestyle borrowers have dried up.One lender, ABN Amro, has reassured its broker and financial planner distribution networks that it is in the market for the long term and that it will continue to introduce new products and features.ABN Amro's director of reverse mortgages, Martin Lynch, says reverse mortgages have established their place in the retiree finance market and demand will continue to grow. "The need has not gone away," he said.Lynch said ABN Amro's sales of reverse mortgages in April were double the volume of a year ago. The group is expanding its suite of product choices with the addition of a protected equity option, monthly income drawdowns, investment property mortgages and accommodation bond finance.Lynch said conditions were tough and some of the boutique lenders might struggle to stay in the market. "Because of rising interest rates the lifestyle borrowers have disappeared. These are the people who don't need the money to buy a new car or repair the roof but would like some extra money for travel or to improve their quality of life in retirement in other ways."What makes this market tough is that the payback on a reverse mortgage is very long term. Figures from the US and Europe show that the average life of a loan is seven or eight years. You get no cash flow during those years and you have to cover set-up costs and commissions."Securitisation gives you some cash but that's not an option now."In Europe the boutique lenders had several years to get established before the market became more competitive. In this market Commonwealth Bank and St George were there at the start and there was a very short period when we all enjoyed wide margins."The margin on a reverse mortgage is about two per cent now. That is not much more than a standard mortgage and the costs are higher."These tough conditions have led to some casualties. In the past couple of months Macquarie Bank has withdrawn its reverse mortgage, Silver Living, from the market and several Macquarie partners, such as Resi Mortgage Corp, have also withdrawn their re-badged offerings.Australian Seniors Finance has stopped distribution through brokers and is now selling on a limited basis through direct and credit union partner channels. Bluestone has taken similar action, cutting off the broker channel and limiting distribution to its partners Westpac (in New Zealand) and credit unions.Lynch said ABN Amro had doubled its share of new lending this year. According to his estimates the latest figures show Commonwealth and St George with 19 per cent each, ASF and Bluestone with 18 per cent each, ABN Amro with 11 per cent and Macquarie with five. ABN Amro is claiming 22 per cent of new lending.The group lends off balance sheet