Reverse mortgages on rise
More than one billion dollars has been lent out on over 20,000 reverse
mortgages in Australia, according to an inaugural report by actuary
Trowbridge Deloitte. They conducted the study on behalf of the Senior
Australian Equity Release Association Lenders, a lobby and
self-regulation group for reverse mortgage lenders.
The survey results will act as a benchmark and be updated every six
months to help track the growth and activities amongst the rapidly
expanding industry.
It is expected that the level of outstanding loans will be close to $1.4
billion at the end of 2006. The survey found that the take up of reverse
mortgages was growing by about 30% a year. Their overall value has more than doubled from $459 million 18 months ago.
The average age of the reverse mortgage borrower is 74 and the average loan size is about $53,000. Couples accounted for about 45% of new loans. Single older women accounted for the next biggest segment of 40% with single men making up the remaining 15%.
Although the majority of the money is being withdrawn in a lump sum,
there is an increasing trend to take it as regular withdrawals –
indicating that the money was being used to top-up pensions rather than for one-off items.
Loans are also being negotiated as fixed interest rate loans – with 26% – as opposed to only 5% 18 months ago – at fixed rates.
About 70% of the borrowers were based in capital cities and loans are
most popular where there has been a property boom.
