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Press releases

Trend Report April 2007

02/04/2007

Reverse Mortgages finally taking off in Australia

Smartline, one of the leading mortgage broker companies in Australia, has released the March 2007 quarter results, showing that reverse mortgages are now the fastest growing products in the Australian mortgage market.

Reverse Mortgages are loans that do not require regular repayments, and are specifically designed for older Australians, typically over 60s who are retired from full time employment. Many retirees find themselves in a situation where they have limited disposable income, which can have a serious impact on their lifestyle, but at the same time they are asset rich, typically owning their own home outright.

Reverse mortgages are well established in the US market, and although they have been available in Australia for a number of years, it is only over the last 12 months that reverse mortgage sales have started to grow rapidly.

  • During the March 2007 quarter, reverse mortgage sales more than doubled when compared to sales over 2006.
  • Reverse mortgages are clearly the fastest growing type of loan in the Australian lending market.
  • More and more mortgage brokers are realising that there is a growing demand for reverse mortgages, with some mortgage brokers choosing to exclusively focus on this market given the highly specialised nature of the product.
  • More and more lenders are introducing reverse mortgage products, as they recognise the growing demand for this product, and the exponential growth that is expected over the next 20 years.
  • Of the 30 lenders on the Smartline panel, 9 now offer a reverse mortgage product. Over Fifty Mortgages (OFM) is the clear market leader, with Bluestone and ASF also offering competitive reverse mortgage products.

Chris Acret, Managing Director of Smartline, comments on the March 2007 results:

“The exponential growth of reverse mortgages is being driven the rapid growth in the number of retirees, as more and more baby boomers reach retirement age, but more importantly the retiree market itself is changing. Today many retirees are no longer satisfied to live quietly on a pension, the nest is empty and they want to travel the country, or travel the world and enjoy their retirement. Many are finding a reverse mortgage is the way to fund their lifestyle in retirement, and they feel they have well and truly earned the right after working for 40 years or more”

“As well as lifestyle needs, many older Australians are using a reverse mortgage to access residential care, which often requires a sizeable initial investment. Prior to the reverse mortgage, the only choice available was to sell the family home, which could be an emotionally devastating move. Now many Australians can access residential care in their retirement, without having to sell the family home”.

“As well as lifestyle needs, many older Australians are using a reverse mortgage to access residential care, which often requires a sizeable initial investment. Prior to the reverse mortgage, the only choice available was to sell the family home, which could be an emotionally devastating move. Now many Australians can access residential care in their retirement, without having to sell the family home”.

 

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