Lenders losing out on reverse mortgage opportunities
The reverse mortgage sector has flourished in the last year, but customers are still being limited by a dwindling number of providers, a Deloitte snapshot shows.
Despite year-on-year growth of 7 per cent, the $3.5 billion market has significant room for improvement given Australia’s ageing population, according to Deloitte’s financial services partner James Hickey.
Currently there are less than five active lenders offering reverse mortgages, compared to around 15 in the pre-GFC era, the survey showed.
Hickey said banks should seriously consider capitalising on the expected boom in demand from retirees.
He said the key reason for the reduction in lenders was the inability of non-bank lenders to find funding.
The survey showed there were 42,000 senior Australian households with reverse mortgages, 88 per cent of which were variable rate loans.
“Contrary to perception, we are seeing a significant interest in the product from active retirees aged in their 60s and 70s,” Hickey said.
“These are senior Australians who want to travel and renovate their homes, as well as settle their debts and enjoy their new-found freedom without having to significantly tap into their superannuation or downsize their homes,” he added.
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