One of the nation's leading retiree advocates yesterday called on the banking industry and the Federal Government to address the dwindling supply of reverse mortgages in the Australian market.National Seniors, an independent lobby group representing elderly Australians, believes homeowners in rural and regional parts of the country are finding it increasingly difficult to secure equity release loans.Basil La Brooy, the senior information officer at National Seniors, said the valuation premium of urban houses over rural dwellings meant that lenders were more inclined to provide equity release credit to metropolitan homeowners."There are many people looking to enter reverse mortgage contracts who simply can't get them, particularly in rural and regional areas," he said."It's a big issue for those retirees who have legitimate reasons for tapping equity in their homes."As more lenders have withdrawn reverse mortgage products it has become terribly difficult for rural homeowners to release equity in their properties."In the last 12 months Westpac and Macquarie have vacated the reverse mortgage market, leaving only Commonwealth Bank and Kiwi-based lender Heartland Bank to meet national demand.La Brooy said that rural housing properties were valued at a significant discount to urban dwellings, which meant lenders were less willing to approve loan applications from retirees in the bush.Under reforms introduced in 2012 aimed at increasing borrower protection, reverse mortgage lenders were required to adhere to statutory LVR caps.For a 65-year old borrower, the statutory LVR cap was set at around 25 per cent. However, ASIC's review of the reverse mortgage market found that lenders were adhering to "more conservative" LVR caps than were prescribed by law.One of the effects of this practice has been to diminish the ability of rural house owners to tap equity in their properties.La Brooy said that the most a rural loan applicant could borrow on a median property valued at $250,000 was about $65,000.However the owner of a median value property in Melbourne could be eligible to borrow $150,000."The values of rural property don't leave a margin for what borrower might require," La Brooy said."The restrictions can be significant for farmers because lenders typically don't take into account farm land even if it is unencumbered."Equity release lending in drought-hit areas has ground to a halt this year.Real estate agents in the northern NSW town of Glen Innes, which has a population of around 8000, reported earlier this month that 300 homes had been put up for sale.Equity release mortgages carry high reputational risks for lenders and this seems to have been the main factor driving Westpac and other major banks out of the market.Banking Day understands that CBA is reviewing its role in the controversial market segment, given the inherent complexity of reverse mortgages and the divisive effects such loans can have on family relationships.CBA and its Bankwest subsidiary have traditionally accounted for a majority of all equity release lending in Australia.But in the 12 months to the end of December last year, almost 70 per cent of  all new reverse mortgages were written by Heartland.Under new managing