The reverse-mortgage market is in full retreat, with the fourth lender this year announcing it is pulling back. Macquarie Bank has withdrawn it's reverse-mortgage lending, Australian Seniors Finance stopped distribution through brokers and Over Fifty Group announced last month it has suspended reverse-mortgage lending.
If you are thinking of using a reverse-mortgage to fund your retirement, it may be harder than you thought. With lenders reducing their lending in this category, there are fewer products to choose from.
Over Fifty Group will keep servicing existing customers and Australian Seniors Finance will sell direct on a limited basis.
It is not all gloom in the market. ABN Amro's director of reverse mortgages, Martin Lynch, says his group remains committed to the market. He says reverse mortgages have established their place in the retiree finance market and demand will continue to grow. "The need has not gone away," he says.
"Because of rising interest rates, the lifestyle borrowers have disappeared. These are the people who don't need the money to buy a new car or repair the roof but would like some extra money for travel or to improve their quality of life in retirement in other ways." Executive director of the Senior Australians Equity Release Association of Lenders, Kieren Dell, says he believes that all lenders are committed to existing customers and will allow existing borrowers to go ahead with planned drawdowns.
Mr Dell says if borrowers are concerned, they should ask the lender whether the funding plan supporting the loan includes a guarantee that continuing funding will be available.
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