According to the Australian Bureau of Statistics, by 2026 there will be 658,900 Australians over the age of 85 and by 2046 this number will reach 1,439,000, or 4.4 per cent of the total population.
In comparison, in 2006 that number was 322,100 and the percentage was 1.6 per cent.
This shifting demographic provides opportunities for brokers to diversify, Andrew Ford, CEO at Heartland Seniors Finance told Mortgage Business – something that brokers should be considering, given a changing market and regulator crackdown.
“With interest-only loans and investor loans under increased scrutiny from regulators, reverse mortgages represent an opportunity for brokers to grow their business and diversify their income stream in a growing demographic.”
However, he added that reverse mortgages are “overlooked by most brokers” and that the biggest challenge brokers face in entering the reverse mortgage industry is a lack of awareness from consumers.
“[There is a] large number of seniors out there that could benefit from a reverse mortgage and help them a little bit in retirement [that] are just not aware of it being an option,” he said.
In order to reach those clients, a targeted marketing strategy is required but brokers should also be considering the potential leads within their existing network. He suggested brokers consider parents of first home buyers, existing customers or clients who come from their referral networks.
In June, Westpac withdrew its Seniors Access and Seniors Access Plus products from their home loan offerings, citing a need to “simplify and streamline” their offering, in a memo to brokers. In June, Macquarie also withdrew its reverse mortgage offerings from the market.
Despite lender movements away from the senior finance market, Heartland Seniors Finance has seen a 500 per cent increase in the level of new demand since the 2015 financial year, Mr Ford said.
He added that while reverse mortgages tend to have lower loan sizes; “The impact on the actual customer can be quite transformational.”
“From a broker’s perspective, whilst the loans are smaller they do grow over time and tend to stick around for a long time with future draw-downs and regular income coming from them.”