Reverse mortgages in Australia are becoming more available through the recent actions of two major lenders, and may be making a comeback as a result, according to a Australian Broker Online report.
Macquarie Bank announced last week it is releasing a reverse mortgage to borrowers age 70 and older, and New Zealand lender Heartland Bank having announced a month prior a deal to buy the Australian Seniors Finance business and Sentinel in New Zealand from Seniors Money International, according to the report.
With around 20% of the market, Australian Seniors Finance is the largest non-bank reverse mortgage lender with Sentinel comprising 80% of reverse mortgages in New Zealand.
“When reverse mortgages coming back that’s when I know the market’s coming back. Because funders willing to fund reverse mortgages means the cost of funding is coming down and they are happy to take a more long-term view of the market,” Chris Evans, business development and relationships general manager at First Mortgage Services (FMS) told the publication.
The current products in the market offer borrowers the ability to borrow roughly 35% to 40% of their home equity.
Some lenders are still hesitant to offer reverse mortgages with the number of active lenders in Australia having fallen from 15 to five currently.
Written by Elizabeth Ecker