Up to 20,000 Australian homeowners with a combined $1.1 billion in house value are using home equity release products to access lump sums of cash, an inaugural study on reverse mortgages has revealed.
The findings of the study released by representative body of reverse mortgage lenders SEQUAL show the market value of reverse mortgage products has more than doubled since its $459 million value in December 2004.
The study, which will be updated every six months by actuarial firm Trowbridge Deloitte, flagged a growing popularity for reverse mortgages to be used as an income stream; however, 80 per cent of loans are still used as lump sum payments.
Couples are responsible for around 45 per cent of the loans currently held, followed by single females holding 40 per cent, and single males only 15 per cent.
About 75 per cent of the deals are made directly, such as through a bank. However, the mortgage broker channel is has also doubled in the last 18 months, now accounting for around 25 per cent of the market.
While deals made through the financial planner “is still in its infancy”, this is likely to be because planners refer the job onto another provider, such as a broker, according to Trowbridge Deloitte partner James Hickey.
The firm is currently surveying the top 25 financial planning firms to research how dealer groups use and recommend these products, Hickey said.
SEQUAL represents 11 of the 16 reverse mortgage providers.
