Members Equity Bank has ruled out launching a reverse mortgage product in the short-term, but chief executive officer Anthony Wamsteker said in the long-term it was very possible.
“It is a growing market that we have to be aware of, and we won’t say we will never be in that market,” he said.
“But at present we do not have a reverse mortgage product under consideration.”
Wamsteker said there was clearly a need for this type of product to assist cash-poor, asset-rich retirees.
“The current reverse mortgage products are not yet proven in the minds of consumers,” he says.
“The issue of children discovering the house they grew up in has been partially sold is another problem for mortgage providers.”
Wamsteker said he was also concerned these types of mortgages were being used as top-up facilities for a lack of superannuation.
“The older generation expected a state pension despite being asset rich, and now they find they have to fund some of their retirement,” he said.
Because of the issues surrounding children not knowing their parents had taken out a reverse mortgage on the family home, Wamsteker said offering such a product was “fraught with reputation risk” for Members Equity.
The growing popularity of reverse mortgages is one of the reasons behind the push for licensing mortgage brokers.
Members Equity sells its products direct rather than using mortgage brokers.
Wamsteker said any broker licensing moves would not add any extra cost to the bank’s overheads.
Although he said selling mortgages through brokers added 0.5 per cent to a mortgage, and Members Equity offered its product at less than its competitors.
Meanwhile, the 42 superannuation funds that own Members Equity have agreed to the bank taking over Industry Fund Services.
The merged organisation has more than $26 billion in funds under management and will continue to offer both retail and wholesale funds management products.
