On Friday May 1st, the Senior Australian Equity Release Association of Lenders (SEQUAL), announced the results of its biannual report on the reverse mortgage industry. According to the report the market is now worth more than $2.5 billion. This represents an increase of 23% over the past 12 months, and there are now more than 37,500 Australian households with a reverse mortgage.
Key points of the industry study:
- 52% of all new reverse mortgage loans are sourced through an accredited intermediary (such as a mortgage broker or financial planner)
- Fixed interest has declined in popularity amongst senior borrowers, now representing only 10% of all new reverse mortgages
- ‘Lump sum’ and ‘line of credit’ options account for 97% of new reverse mortgages
- The average age for existing borrowers is 74, however the increasing popularity of reverse mortgages among the 60-70 age group continues, with under 70s taking 37% of all new loans (up from 30% the year before)
- The average reverse mortgage loan size is now $66,000 (up from $63,000)
Although the volume of new reverse mortgage loans slowed in the last 6 months of 2008, this was an understandable response to the global financial crisis, the worst of which has since passed.
Confirming that senior Australians often rely on intermediaries such as mortgage brokers to guide them through the process, SEQUAL CEO Kevin Conlon pointed out that SEQUAL has developed a highly effective industry accreditation protocol.
“The financial planning and mortgage broker communities represent the majority of reverse mortgage sales and it’s critical that consumers are able to easily identify and access properly-trained intermediaries,” said the report’s author, James Hickey.