More on government reverse mortgage survey

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The NSW Department of Fair Trading consumer survey on reverse mortgages provides a mixed bag of news for the industry and consumers.

On the one hand, the results show there is a significant un-tapped market with 48% of respondents indicating they would take a reverse mortgage some time in the future. This will gladden the hearts of lenders and provides further evidence, if any were needed, that there is a clear long-term need for these loan products in Australia. However the low existing take-up rate (only 3% of respondents had previously had established a reverse mortgage), indicates that most people still do not comprehend how reverse mortgages can be used to improve quality of life in retirement. 

(These statistics are broadly similar to previously published industry data, and probably within the acceptable range of ‘margin for error’ given the size and methodology of the survey)    

In addition, the fact that 20% of respondents were still not aware of reverse mortgages– even after 5 years of active product marketing by the industry – is somewhat disappointing. On an individual level, the results indicate many people continue to needlessly struggle with money, simply because they are not aware that a reverse mortgage provides them with another financial option.

From an industry perspective, the survey shows that there is still more work to be done in raising public awareness of the concept (the breadth of understanding). However with an 80-90% public awareness of reverse mortgages already achieved , there is a real case for SEQUAL and the industry to focus now on the depth of public understanding and dispel many myths that still exist.