Although it is just a bit more than halfway through 2018, we can already say that this year is a big one for the Reverse Mortgage industry. With tighter government regulation, expansion of Pension Loan Scheme (PLS), and the growing market demand, the Reverse Mortgage niche is still a vibrant and stable industry.
In late 2017, the Australian Securities and Investments Commission (ASIC) has conducted a surveillance exercise on Reverse Mortgages to test the compliance with responsible lending obligations, measure consumer understanding of the products, borrowing experiences and outcomes.
Aside from scrutinizing Reverse Mortgages, ASIC is also monitoring the provision of financial advice to the elderly.
This only proves that Reverse Mortgages are one of the most heavily regulated financial product in Australia, which is crucial to protect the interest of our customers.
While the Australian government tightens the regulation on private Reverse Mortgage providers it is now expanding its own equity product for Australian seniors with full age pension entitlements.
As part of the 2018 Federal Budget, eligible seniors can access the government funded Pension Loans Scheme at a max of $17,800 annually starting 1 July 2019 if legislation passes.
The Australian Government has been offering the Pension Loans Scheme through the Centrelink as a voluntary reverse equity mortgage for older Australians who need to supplement their retirement income.
[ Related Post: Pension Loans Scheme Extension Benefits Age Pensioners But Still Limited ]
At Seniors First, we see this government program as a validation of our efforts to promote Reverse Mortgage as a way for senior Australians to live a better retirement. The recent expansion further attests to the benefits of unlocking home equity to fund needs during retirement age.
As of press time, the following companies are offering Reverse Mortgage products in Australia:
As a leading Reverse Mortgage broker, Seniors First works with many of the providers mentioned above.
Despite the growing demand for Reverse Mortgage loans in Australia, some lenders decided to drop their home equity products.
Macquarie and St. George both withdrew their Reverse Mortgage loan product in 2017.
St. George announced last year that Westpac (owner of St. George bank) reviewed their suite of home loans to simplify their systems and increase productivity in operations.
[ Related Post: St. George Reverse Mortgage No Longer Available ]
Aside from the withdrawal of Reverse Mortgage and equity release loan products, St. George also discontinued its equity access low documentation loans and some fixed rate low documentation home loans.
(It is important to take note that this move from Westpac does not only affect Reverse Mortgage products. The bank also discontinued or repackaged other financial products such as insurance and home loans as the bank tries to adjust its lending criteria to changing market conditions).
While some lenders have dropped their Reverse Mortgage offerings, the need by seniors Australians for home equity release products still persists and is in fact growing.
Australians are becoming more aware of Reverse Mortgage, and they usually turn online to learn more about this financial product.
According to Google Australia search traffic, the keyword “Reverse Mortgage” has around 2900 monthly search volume.
Meanwhile, the keywords “Reverse Mortgage loan” and “Reverse Mortgage calculator” has 590 and 390 monthly search volumes respectively.
Popular keywords also include ANZ Reverse Mortgage, NAB Reverse Mortgage, and Reverse Mortgage westpac.
People also search for Bendigo bank Reverse Mortgage but in fact, this refers to the Homesafe equity release product that is typically available in Sydney and Melbourne.
Just like other financial industry in Australia – banking, insurance, property loans – Reverse Mortgage is undergoing some change. Most of these changes are positive, and given that Reverse Mortgages have been offered since 1992, the market is now quite mature.
If you are interested to learn more about Reverse Mortgages, you can reach me at 1300 745 745 or you can post your comments below.