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Reverse mortgages have been tipped to make a comeback – but most brokers don’t care.
According to a recent poll conducted byThe Adviser, 29.1 per cent of respondents said reverse mortgages were wrong, while 24.1 per cent said their clients were not interested in them.
Another 35.4 per cent said they do offer reverse mortgages, while 11.4 per cent said it was something they were considering.
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David Carruthers from Carruthers Financial Services said he had no interest in expanding into reverse mortgages because older borrowers are not his target market.
Mr Carruthers also said he felt uneasy about reverse mortgages because there could be questions about the mental soundness of the borrower and potential liability issues for his business.
Discovery Finance Group director Jayden Vecchio said he had confidence in reverse mortgages after dealing with them during his time at Bankwest.
However, he told The Adviser he had no interest in selling the product, partly because of the extra accreditation required.
Senior First has offered reverse mortgages since being founded in 2006 – and managing director Darren Moffatt said the market was the most promising he had seen since the GFC.
“All the wind went out of the sails within 2008 and the investment capital is only just starting to return to the sector,” he said.
“There is money coming back into it and the reason for it is there is a wave of people retiring with little to no super.
“There’s a huge need, there’s a huge funding gap, and the only feasible option is reverse mortgages.”
Peak industry body Senior Australian Equity Release Association has also observed growth in reverse mortgages.
Chairman John Thomas said there was now much greater acceptance of reverse mortgages than when the association was founded in 2004.
He told The Adviser that Australians are no longer wedded to the idea that the family home had to be passed on to the next generation.
More than 20 lenders offered reverse mortgages before the GFC.
Commonwealth Bank is the only major bank that currently offers reverse mortgages, while Bank of Melbourne, BankSA, Bankwest, Macquarie and St George also offers reverse mortgages. P&N Bank is another lender that does reverse mortgages, although not through brokers.
Brokers who offer reverse mortgages are subject to even stricter compliance rules than for general residential loans, according to the MFAA and FBAA.
The Adviser will explore reverse mortgages in greater detail in its July issue, due out in mid-June.
