Reverse mortgage market hits $1.8 billion mark
Accounting for over $1.8 billion, Australia’s reverse mortgage market is booming, with more than 31,500 reverse mortgages existing in June last year. And Australians should expect this number to grow further, according to recent Towbridge Deloitte research, which indicated that uptake will continue to soar as more advisers use the loans as a financial planning tool.
Reverse mortgages, which release home equity in a property with repayments deferred until the owner dies or the home is sold, have raised plenty of questions about ethics recently. Nevertheless, the market grew 67 per cent in the past 12 months, according to the study, which was commissioned by the Senior Australians Equity Release Association of Lenders.
The research indicated that mortgage brokers have surpassed direct sales and sales through financial planners (9 per cent of sales) as the largest channel for reverse mortgages, which may be paid as either a lump sum — the most popular method accounting for around 85 per cent of the loans — or multiple payments as an income stream.
The average age band of new borrowers was 73 years, while the average amount of additional redraw was $10,500, and almost a quarter of existing borrowers drew down additional funds from their facility in the first six months, while 10 per cent repaid their loans in full.
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