The value of reverse mortgages in Australia has grown to $3.7 billion according to a new Deloitte report, with an increasing number of retirees using them to supplement their superannuation retirement income.
Reverse mortgages are those where a homeowner can borrow money against the value of their home, and no repayment is required until the borrower has passed away or the home is sold.
Around 3,400 new borrowers took out a reverse mortgage in Australia in 2014, and Deloitte say with the growth should come more support and education to help open up the largely untapped sector.
Australians over the age of 65 currently hold over $500 billion of home equity.
Reverse mortgages are used mostly for debt consolidation, an additional income stream and home improvements.
Deloitte’s James Hickey, who wrote the Reverse Mortgage Report, told Business Spectator there was renewed interest in using reverse mortgages as a useful option for retirees to supplement their superannuation income without downsizing their house.
“We believe banks, insurers, qualified financial advisers and superannuation funds are best placed to embrace, understand and educate Australians on the options available with equity release products,” he told Business Spectator.
“These are the groups seeking to help their customers aged 65-plus 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.”
Deloitte said the large banks like Commonwealth, St George, BankWest and Macquarie, were all prominent in offering retirees reverse mortgages.