Asset rich and cash poor Baby Boomers are expected to double the number of reverse mortgages within the next 10 years, according to a finance broker.
Diversifi’s Rose De Rossi says Baby Boomers will significantly accelerate the number of reverse mortgage loans in the next decade.
According to the latest Deloitte Reverse Mortgage report, approximately 16,000 reverse mortgages were written in 2005. This figure increased to around 40,000 in 2014.
In 2005, the loan book was close to $750 million, rising to more than $3.6 billion in 2015.
“Falling interest rates, the rising cost of living and current economic downturn are also driving Baby Boomers to use reverse mortgages. We are finding that older clients still hold debt and are not managing on their pension or savings,” Ms De Rossi said.
“Reverse mortgages offer many benefits including they improve cash flow, no repayments are required, quick access to equity is available, proof of income is not required, the interest rates are relatively low, they offer peace of mind in retirement, extra money is available for activities such as travel and they do not affect the pension unless the money is invested.”