Both retirees and financial services providers are missing a major opportunity, a new report has claimed.
In its annual Reverse Mortgage Report, Deloitte has claimed equity release is a missed opportunity for financial service providers and ageing Australians. The report estimated more than $500bn of home equity is held by Australians aged 65 or over.
“Banks, insurers and superannuation funds are best placed to better embrace, understand and educate Australians on the option of equity release products," Deloitte partner and report author James Hickey
“These are the groups seeking to help their customers aged 65 and over to navigate their retirement with the dual challenges of longevity and income sustainability. Bringing what is often their most substantial asset - their home - into such discussions must be in the best interests of everyone,” he said.
The company pointed to figures from a previous report on superannuation, claiming that the average Australian's superannuation account balance was at best a third of the required amount to deliver a modest income in retirement.
“Given that for many retirees the equity in their home continues to represent two thirds or more of their entire wealth, well in excess of their superannuation balance, a reverse mortgage is a very useful consideration for cash-poor asset-rich retirees who want either extra cash flow or to fund an aged care accommodation bond,” Hickey said.
Hickey argued that the sector was being overlooked, with growth in the reverse mortgage market flat last year.
"The 4,300 new borrowers in 2013 offset the existing borrowers who repaid their facility, and the average loan size advanced remained around $85,000."