Reverse mortgages lacking advice
The latest figures into the reverse mortgage market reveal a worrying trend of financial planners continuing to retreat from the market, DomaCom general manager - professional development Kevin Conlon said.
According to the Deloitte/SEQUAL latest equity release market report, direct lending remains the largest channel for new settlements at 63 per cent. In addition, 75 per cent of outstanding loans were written direct by lenders.
Conlon said much of this has to do with the fact that the majority of the reverse mortgage market has retreated to the major banks since the global financial crisis - and the banks are not making any strong effort to promote these products.
“In the past, when there were non-bank specialist lenders, then those providers engaged more effectively with independent financial advisers,” he said.
He added that there was strong consumer resistance in getting advice around equity release products because many homeowners were used to borrowing against their home in the form of a mortgage loan.
The report found that reverse mortgages are gaining significant interest from active retirees aged in their 60s and 70s, and Conlon said it was imperative that advice be sought.
“The planning community has to recognise that for the over-65s, something approaching 70 per cent of their personal wealth is tied up in the family home,” he said.
“As we’re increasingly funding a longer retirement, it is becoming increasingly obvious that the family home has to be seen as an active asset and one which might help to improve the standard of living in retirement.”
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