Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Potential $500 billion open to boutique reverse mortgage lenders

Smaller lenders have been tipped as the prime prospects to capitalise on the potential half a trillion dollars of home equity held by the Australians over the age of 65.

Australia’s reverse mortgage market flat lined in the 12 months to December 31, with a steady loan book of $3.6 billion, according to a Deloitte report.

Released yesterday, the Deloitte Reverse Mortgage Survey 2014 found that the number of equity release loans had decreased over the year, from 42,455 in December 2012 to 41,435 in December 2013.

With only one to two per cent of retired households using a reverse mortgage, Deloitte partner James Hickey believes it is a market that is yet to be tapped.

Reverse mortgage products are currently offered by a handful of lenders including CBA, Bankwest, St. George and Macquarie.

Advertisement
Advertisement

But the real opportunity is for smaller lenders, Mr Hickey said.

“Compared to the size of the forward mortgage market which is $1.3 trillion, when you look at a $3 billion market it is a decimal place in terms of the overall market,” he said.

“For smaller lenders, regional lenders, credit unions and specialist non-bank lenders, getting a 20 to 30 per cent share of a market that is $3 to $4 billion and growing is quite a substantial lift to their mortgage portfolio.”

The majority of reverse mortgage activity is being written through Macquarie Bank, while some non-bank lenders are currently raising funds to be able to be active product providers, Mr Hickey said.

“For them, this does give some material incremental growth,” he said.

PROMOTED FEATURES


The GFC was responsible for halting what was a growing reverse mortgage market after funding dried up, forcing many non-banks out of the market.

Between 2006 and 2009 the market grew by 79 per cent; from 2009 to 2013 it grew by 31 per cent.

Loans written through the third party have halved in the last five years.

In 2009, 50 per cent of reverse mortgages were being written by mortgage brokers.

Today, only 25 per cent of reverse mortgages are written through the third-party channel.

 

Potential $500 billion open to boutique reverse mortgage lenders
mortgagebusiness

Latest News

The major bank has confirmed reports that it has identified 200,000 accounts with incorrect balances that may have led to customers accessin...

The interim CEO of the bank’s institutional arm has announced his retirement, while the bank has made an internal appointment to the role ...

The major bank has partnered with a crowdsourced security company to establish a “bug bounty” cyber security program. ...

FROM THE WEB
podcast

LATEST PODCAST: Responsibilities and responsible lending

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.