 Fear over reverse mortgages
According a News.com article, retirees wanting to use their home as equity to fund their lifestyle could find it harder to obtain reverse mortgages as firms become increasingly concerned over the credit crunch.
Canstar Cannex says several lenders have stopped offering reverse mortgages in the past six months, but believes that the reverse mortgage market is simply slowing due to economic pressure and will be revived again once conditions are more favourable.
"Unfortunately, we are seeing reverse mortgages fall victim to the funding shortfalls financial institutions are currently experiencing," senior financial analyst Harry Senlitonga said.
"Many lenders are suspending products from the market but are likely to reinstate those products when financial times improve."
Mr Senlitonga said a reverse mortgage was a loan against a person's home that is not repaid until the owner dies. Once the owner no longer lives at home, the mortgage is to be repaid, generally by the inheritor of the house.
Home owners with an existing reverse mortgage are not affected, but many lenders have decided to stop offering the product to new customers. However, there are still some lenders - mainly the major banks - that still offer reverse mortgages to new customers.
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