Existing Market Failure
The mainstream HECM market is the most dysfunctional of all the major financial service markets. Lenders don't display their prices anywhere, and borrowers don't price shop. Most originators always charge the maximum origination fee allowed by law, regardless of how much they are making on the transaction. Markups are 2.5 to 3 times larger than in the standard mortgage market, though the work load is much the same. The details are set out in my Wharton working paper HECM Reverse Mortgages: Is Market Failure Fixable?
Reverse mortgages tick higher
The total value of Australia's reverse mortgages has ticked up 3 per cent to $3.7 billion with a growing proportion of retirees using the source to supplement their superannuation retirement income, according to an annual report by Deloitte.
But the firm says more "support and education" is needed to open up the largely untapped sector.
Deloitte's Reverse Mortgage Report for last year estimates that 49 per cent of people using the equity release option are aged between 70 and 79, and 75 is the average age of new borrowers.
However, Deloitte said the total reverse mortgage value remains a small fraction of the more than $500bn of home equity held by Australians over 65.
Currently there are almost 40,000 reverse mortgages on issue in Australia with an average loan size of $92,000, up from $86,000 in 2013, Deloitte financial services partner and report author James Hickey said
The mainstream HECM market is the most dysfunctional of all the major financial service markets. Lenders don't display their prices anywhere, and borrowers don't price shop. Most originators always charge the maximum origination fee allowed by law, regardless of how much they are making on the transaction. Markups are 2.5 to 3 times larger than in the standard mortgage market, though the work load is much the same. The details are set out in my Wharton working paper HECM Reverse Mortgages: Is Market Failure Fixable?
Reverse mortgages tick higher
The total value of Australia's reverse mortgages has ticked up 3 per cent to $3.7 billion with a growing proportion of retirees using the source to supplement their superannuation retirement income, according to an annual report by Deloitte.
But the firm says more "support and education" is needed to open up the largely untapped sector.
Deloitte's Reverse Mortgage Report for last year estimates that 49 per cent of people using the equity release option are aged between 70 and 79, and 75 is the average age of new borrowers.
However, Deloitte said the total reverse mortgage value remains a small fraction of the more than $500bn of home equity held by Australians over 65.
Currently there are almost 40,000 reverse mortgages on issue in Australia with an average loan size of $92,000, up from $86,000 in 2013, Deloitte financial services partner and report author James Hickey said
Reverse Mortgage Leads from Paul Michaels on Vimeo.