A third of Mortgage Business readers sell reverse mortgages despite settlements declining over the past three years.
A poll of 134 readers found 31 per cent offer reverse mortgage products while 69 per cent do not.
As at December 2013, there are only 41,435 reverse mortgages on issue in Australia with the total market size now $3.56 billion, according to Deloitte research.
This means only one to two per cent of retired households use a reverse mortgage.
A number of industry groups have highlighted the importance of equity release products in their second submissions to the Financial System Inquiry.
The Association of Financial Advisers (AFA) noted that while reverse mortgages have been in the Australian marketplace for some time, they appear to be unpopular.
“This might reflect traditional Australian views about the role of the family home and concerns with the reality that this is a loan product taken out at a time when their income is inadequate,” the AFA said in its second FSI submission.
“It is our view that reverse mortgages are an important product option that is suitable for some client circumstances,” it said.
While the AFA concedes that reverse mortgage have a role to play in the financial system, it does not see any need to introduce any further measures to support greater use of the product.
“Appropriate financial advice would uncover this as one solution available to a client,” it said.
But according to former Sequal chief executive Kevin Conlon, senior Australians are being neglected.
“It would be a mistake for financial advisers to believe that retirees have ended their income-generating years in that they are leaving employment, and to somehow see that as a withdrawal from the economic system,” Mr Conlon told Mortgage Business. “That is totally wrong.”
Mr Conlon believes the driving force that brings equity release into play is that the overwhelming number of senior homeowners don’t wish to move away from their home.
“That is the key to it,” he says.
In its annual Reverse Mortgage Report, Deloitte estimates more than $500 billion of home equity is held by Australians aged over 65 and is available to be leveraged.
“Banks, insurers and superannuation funds are best placed to better embrace, understand and educate Australians on the option of equity release products,” Mr Hickey says.
“These are the groups seeking to help their customers aged 65 and over to navigate their retirement with the dual challenges of longevity and income sustainability,” he says.
“Bringing what is often their most substantial asset – their home – into such discussions must be in the best interests of everyone.”