What does the U.S meltdown mean for reverse mortgages?

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The latest turmoil in the U.S to arise from the sub-prime crisis is likely to have some impact on the Australian reverse mortgage industry over the coming months.

The collapse of Lehman Brothers and bailout of the largest American insurer, AIG, are serious signals that this crisis is not yet over. Whilst Australia’s banking system is very solid, these events will further affect liquidity and overall economic confidence.

It is very likely that lenders will tighten the reins further, and this may result in credit rationing. The falling property market makes does not help the cause.

For seniors who are thinking of accessing funds via a reverse mortgage, there is no time to delay. It is very possible that lenders will soon restrict the amount of money they will lend on these loans. If this occurs, it will probably (hopefully) be a temporary measure of 1-2 years duration, but it will cause further aggravation for people who are struggling on the pension or have already seen their superannuation decimated by the share-market decline.

The message is simple: if you are thinking about a reverse mortgage, get in quick. Call Seniors First for help on  1300 745  745.