Reverse mortgage market continues to grow
The Australian reverse mortgage market grew by 14 per cent in the six months to June 2008 (more than 27 per cent over the past 12 months) to be comprised of more than 36,000 loans with a total outstanding lending of $2.3 billion.
A study by Deloitte Actuaries and Consultants found there were 3,500 new loans (settlements) written in the first half of 2008, although this was down 8 per cent on the six months to December last year.
Commissioned by the Senior Australians Equity Release Association of Lenders (Sequal), the study found the size of each new loan grew over the six months to June 2008, on average from $60,000 to $63,000.
Deloitte Actuaries and Consultants partner James Hickey, who led the study, said both the growth and settlement figures needed to be viewed against a backdrop of a “more constrained” lending market.
“It has been a difficult year for lenders, although 3,500 new loans were written, with borrowers also choosing to be more cautious.”
Discharges, or the rate at which borrowers repaid their reverse mortgages, remained at a rate of about 10 per cent per annum, Hickey said.
The majority of those discharges were due to owners voluntarily repaying or selling their property, with only 1 per cent for mandatory reasons (death or a move into aged care), he said.
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