Reverse mortgage market grows to $3.7 billion

by Julia Corderoy07 Sep 2015
The market for reverse mortgages in Australia has grown to $3.7 billion, according to a new report, with brokers writing one in three new reverse mortgages.

In its annual Reverse Mortgage Report, Deloitte found that at 31 December 2014, the reverse mortgage market in Australia consisted of 40,000 reverse mortgage facilities, with total outstanding funding of $3.7 billion – a 3% increase over the year. 

Approximately 3,400 new borrowers took out a reverse mortgage in 2014, with the average size of a reverse mortgage loan at almost $92,000, up from $86,000 in 2013. Brokers and planners accounted for 31% of settlements in 2014, compared to 69% through the direct channel.

According to the report, the use of property to be considered alongside other retirement sources is an area of emerging interest across broader financial services organisations including industry funds, retail wealth managers, banks and non-bank lenders and insurance companies.

Deloitte estimates reveal that more than $500 billion of home equity is held by Australians aged over 65.

“A reverse mortgage offers the option for retirees to stay in their home and access equity in a manner which may have far less impact, if any, on their social security entitlements. This means that a reverse mortgage can be a very useful option for retirees to consider when looking for ways to supplement their superannuation retirement income,” James Hickey, Deloitte Partner Financial Services and author of the Deloitte report said.

In addition to new borrowers, 4,900 borrowers voluntarily repaid their reverse mortgage loan in 2014, representing 12% of total borrowers. Hickey says this proves that many borrowers are using the product to cover short terms needs and then repay the mortgage once they are ready to finally downsize their home.


  • by Broker 7/09/2015 10:45:22 AM

    Given the average loan sizes and associated headaches, its not even worth the labour costs to submit the application via the broker channel. hence 69% go direct.

  • by John Nelson 7/09/2015 5:19:16 PM

    I would NEVER do this product!

    I worked at CBA and the word spread our local branch was doing them. We had almost the entire local lawn bowls club at the branch.

    The amount of work you put in for a $50k loan is ridiculous. Plus the fact you get angry calls from grandkids complaining that the bank is taking part of their inheritance just make these loans the most annoying on the market.

  • by Harold Spencer 8/09/2015 12:34:31 PM

    Written several of these loans and while the upfronts are low due to loan size, the ongoing trail can help make up for it. In relation to kids and the lawn bowls parade that's more how you manage the client than the product. Let's face it a branch never handles these things well.