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An annual reverse mortgage report has revealed a large opening for brokers, even though the market has stalled.
Deloitte’s Reverse Mortgage Report found that $3.6 billion of reverse mortgage loans were written in 2013 – the same as the previous calendar year.
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The number of loans declined by 2.4 per cent, while the average loan size increased by the same amount.
However, the market has expanded by 135.8 per cent since 2006, when it was worth $1.5 billion.
According to the report, brokers and planners accounted for 22 per cent of settlements in 2013. That compares to the 49.9 per cent market share that brokers hold of the home loan market.
More than $500 billion of home equity is held by Australians aged over 65, the report said.
Reverse mortgages could be a compelling financial option for many of those seniors, with another Deloitte report finding the average superannuation account will provide “at best a third of what will be required to deliver even a modest income in retirement”.
Deloitte financial services partner James Hickey said reverse mortgages were an option that cash-poor and asset-rich retirees should consider.
“While many retirees focus on superannuation and think they have to downsize their home – which has impacts on pension eligibility and Centrelink entitlements – being aware of equity release options and how they work requires support and education,” he said.
“The aged care funding changes that came into effect 1 July 2014 should further provide evidence of the beneficial role of equity release products to fund aged care accommodation bonds. This is an opportunity only a few groups have identified.”
[Related: Brokers cold on reverse mortgage market]
