Reverse mortgage body pleads for government intervention

by Adam Smith18 Jul 2014
An industry lobby has called on the government to step up its support of the reverse mortgage market as Australia's population ages.

Equity Release OZ has pointed to the interim report released by the Financial System Inquiry, saying that the report addressed equity release only briefly. Equity OZ chief executive Kevin Conlon said the report poses the "limited" question of what current regulations might impede the development of equity release products. But Conlon said the market needs much more than the removal of regulations.

“At the time of the Global Financial Crisis and as chief executive of the peak industry body, I warned the government that reverse mortgage providers would not survive without short-term government intervention," Conlon said.

Conlon said the market had now contracted "from a large and diverse group" to just five lenders. He urged the FSI to better address the reverse mortgage market in its second round of industry consultations, and claimed government and regulators played an important role in encouraging providers such as superannuation companies to enter the equity release market.

“An effective and ethical equity release market needs to emerge in Australia, so that senior Australians will have the ability to tap into the stored wealth of their home in order to live well in retirement and importantly, stay in their home,” Conlon said.

COMMENTS

  • by BRIAN 18/07/2014 10:35:45 AM

    I have already made comment to Tony Abbott and copied to Clive Palmer yesterday about this. Government has to relax and allow seniors to enjoy retirement by releasing up to 60% of property value - and get Centrelink, who seem to be taking advantage of equity release to stop pension payments, off their backs

  • by SKEPTIKAL 18/07/2014 11:50:17 AM

    I agree - if I was on a limited income like an Aged Pension and had a house worth ANY AMOUNT $, I would want to access the equity in order to live a full and happy retirement.

  • by Greg R 18/07/2014 12:49:07 PM

    For older Australians who may never have had a chance to have superannuation, their home is their superannuation and they need a realistic ability to access it. It is tough living on a subsistence pension, especially as a single. It is ASIC under the guise of protecting consumers that are making it harder on all providers to operate in this market, they have dried up the ability for a 60 year old to access funds via a RM and made it difficult for an over 55 to borrow under a normal mortgage.

    Lenders need to know they will get a reasonable return for the risk of not receiving regular payments, so the concept of 60% LVR is unrealistic, however the long term nature of a RM would suit a superfund ideally. It would not be difficult to have properties 'valued' each year based on a RPData type value so it would be consistent.
    I certainly agree with the lack of knowledge most Centrelink people have and what they portray to pensioners, FIS officer know but the average call centre person has no idea and just sprouts doom and gloom and pension payments implications.