The already fast growing reverse mortgage market is set for a veritable boom as more and more baby boomers take out reverse mortgages to help fund their retirements, according to the managing director of a Sydney-based financial planning firm.
Sydney Wyde Investments and Mortgage Management (SWIMM) boss Tim Stoyle predicts the reverse mortgage market, currently worth between $1 billion and $1.5 billion, will reach about $15 billion by 2013.
“It is a real growth market and the figures we’ve seen show it is growing at 50 per cent per annum compared with previous years,” he said.
Stoyle said the boom is being fuelled by many baby boomers’ realising their superannuation and the Government pension stream will not be enough to fund their retirement.
“A lot of older people don’t have access to any income stream and are struggling to pay bills, with the standard Government pension not enough. About four million baby boomers are nearing retirement age and compulsory superannuation at current contributions has only been around for the past 10 years or so.”
SWIMM has set up a reverse mortgage consultancy business that will show clients how a reverse mortgage may add to their retirement income stream.
“We’re tying to show that reverse mortgages are not a bad thing as long as they are used responsibly,” he said.
“The most important rule is not to take out a lump sum against the house … A reverse mortgage is a great option provided it is taken out as an income stream because compound interest only starts at whatever you draw out.”
