Reverse mortgage products in short supply
The Government's failure to adequately respond to industry representations concerning the reverse mortgage sector has continued to affect supply in the sector, according to industry experts.
Kevin Conlon, Council of Mortgage Lenders chief executive and former CEO of Seniors Australian Equity Release (SEQUAL) said the Government's inaction on the Productivity Commission's draft report into the sector is a "market failure".
Despite this, he said there are second-generation products emerging that may be better suited to retirees going forward.
According to current SEQUAL chairman John Thomas, there are simply no non-bank lenders writing new reverse mortgage loans and it was fair to say that demand for these was currently outstripping supply.
"Most of the non-bank providers haven't had the funds to maintain what they've got, let alone developing a new product and taking it to market," he said.
The Australian Securities and Investments Commission (ASIC) recently launched its MoneySmart reverse mortgage calculator which lenders will be required to use when projecting the value of a borrowers' property that may become reverse mortgaged property.
Thomas said the regulator's approach is really a "mirror" of SEQUAL's current code of conduct and will not do much to change retirees' attitudes towards reverse mortgages.
"As with anything, if it's got an ASIC label or a government label, it probably gives people a little bit more confidence," he said.
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