The most popular reverse mortgage lender in Australia over the last few years, Royal Bank of Scotland, recently announced it has suspended all new lending pending a trade sale of the reverse mortgage business. Existing commitments will continue to be honoured and current RBS reverse mortgage borrowers will not be affected.
Following a strategic review of its businesses, the partially state-owned Royal Bank of Scotland decided to exit all non-core retail businesses outside of the United Kingdom. As a result, it is closing its Reverse Mortgages Services Pty Limited.
It is hoped however that the RBS product range will re-emerge in several months under different ownership. Give that there are now only three or four significant reverse mortgage lenders remaining, the permanent exit of the former RBS product would be a major blow to senior borrowers and the aged care industry, for whom RBS was the major funder of accommodation bond finance.
Until its closure to new reverse mortgage applications, RBS was attracting around 40 per cent market share for all new reverse mortgages in Australia.
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