Australia’s reverse mortgage market reaches $3bn at 31 December 2010DOWNLOAD
25 May 2011: Deloitte Actuaries and Consultants released its ninth comprehensive study of the Australian reverse mortgage sector today. Commissioned by the Senior Australians Equity Release Association (SEQUAL), the study shows that at 31 December 2010 the reverse mortgage market in Australia consisted of more than 41,000 reverse mortgage facilities with total outstanding funding of $3 billion. This represents 11% growth over the 12 months from 31 December 2009.
James Hickey, Deloitte Actuaries and Consultants partner, who led the study, said that there were more than 5,600 new borrowers accessing the equity in their homes in 2010. “With settlements worth $320m, the size of the market has returned to 2008 levels, which is a 22% increase over 2009,” he said. “The average size of each loan also increased to $72,500 (from $70,000 in 2009). When we initiated this study on behalf of SEQUAL in December 2005, the average loan size was $51,148.
“Although there is a continued and increasing appetite for this equity release product, spread across a larger group, settlements have not yet returned to the two peak years in 2006 and 2007, pre Global Financial Crises,” Hickey said. “Nevertheless there remains a gradual recovery in growth,” he said.
Kevin Conlon, Chief Executive of SEQUAL, the peak industry body which governs equity release providers and delivers consumer safeguards, said, “The majority of equity release customers are couples around 75 years old who have accumulated wealth through home ownership. They mainly use their released funds to supplement their retirement income, undertake home improvements following a decision to “stay in place” during their retirement or clear their outstanding debt.
“It appears that attitudes towards retirement funding are changing. As Baby Boomers approach retirement, equity release strategies are increasingly seen as a useful option to access the wealth stored in their home in order to meet the challenge of living longer and living well.”
Please download the attachment below for the Summary of Key Findings.
Kevin Conlon pointed out that SEQUAL is comprised of both major banks and specialist non-bank providers and firmly believes that the trend towards releasing home equity to fund retirement will continue to grow as the Australian population ages and seeks to enjoy an active retirement.
Hickey noted that the results show that younger borrowers still utilise larger proportions of their available facility with an average 9% loan to value ratio for those aged up to 65 where there is an average maximum LVR available of 13%. Those aged over 80 however only accessed an average of 17% LVR against a possible maximum of 33%.
Conlon reaffirmed that SEQUAL and its members are committed to appropriate product design, high standards of practice and responsible borrowing. “The effective use of a combination of lump sum and income stream options enable borrowers to borrow what they want, when they need it,” he said.
“It is important that consumers make informed decisions and carefully consider how their needs may change over time,” he added.
Conlon emphasised that SEQUAL’s industry accreditation protocol, raises professional standards above the minimum education requirements imposed by legislation and industry association membership. SEQUAL has established a national network of accredited Seniors Equity Release Consultants (SERC) which assist consumers make informed decisions about equity release strategies.
He welcomed the encouragement provided by both industry sector associations and market regulators for the meaningful contribution SEQUAL has made towards the establishment of an efficient and ethical seniors equity release market in Australia.
For more information about SEQUAL® approved lenders and reverse mortgages go to www.sequal.com.au.
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