Reverse mortgage market hits $2 billion

Australia’s reverse mortgage market has hit $2 billion in value, with more than 33,700 loans taken out, representing over 34 per cent growth in the past 12 months.

According to the Deloitte Reverse Mortgage Study commissioned by the Senior Australians Equity Release Association of Lenders (SEQUAL), financial planners and other informed intermediaries are now increasingly supporting borrowers in deciding how and when to access reverse mortgage funds.

“The financial planning and broker communities now represent over 50 per cent of all sales of reverse mortgages, with the use of financial planners increasing markedly from 2 per cent of new loans in 2006 to 9 per cent in 2007,” said Trowbridge Deloitte partner James Hickey.

“This is important as it allows borrowers to ensure they receive quality advice from accredited intermediaries.”

Hickey said it was encouraging to see the continued growth in the industry despite the challenges that the general mortgage industry was experiencing in the second half of 2007.

SEQUAL executive director Kieren Dell said, “Overall, 2007 saw sustained borrower demand but there was some slowing in sales in the second half of 2007, primarily due to the tighter availability of funds impacting lenders, rising interest rates and other factors of economic and political uncertainty in that period. However, sales in 2007 remained almost 50 per cent above levels in 2005.”