The number of reverse mortgages in Australia has increased, a new study has found.
According to the report by Deloitte Actuaries and Consultants, the local reverse mortgage market grew by 13 per cent over the last financial year, measured by outstanding balances after 4,950 new borrowers entered the market.
The average age of the reverse mortgage borrower is 74, the report said.
The report also found that the main reason for taking out a reverse mortgage was to receive a regular income stream in retirement, followed by debt repayment and home improvement.
SEQUAL chief executive Kevin Conlon said the average borrower took out about 70 per cent of what was available to them, showing senior Australians were showing constraint.
“They’re making informed decisions, they’re mapping their requirements and they’re borrowing what they need rather than what they desire or what’s made available to them,” Mr Conlon said.
The study also showed that 10 per cent of borrowers voluntarily repay their reverse mortgage each year.
“This is an important finding as it shows that such borrowers are only being exposed to reverse mortgage compound interest for a relatively short period of time,” Mr Hickey said.
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