Australia's reverse mortgage market grew by 80% during 2006 according to a new study from the Senior Australians Equity Release Association of Lenders (SEQUAL).
The study found that more than 27,500 reverse mortgages, with a total book size of just over $1.5m, had been written as at 31 December 2006. The average loan size was $54,200.
Kieren Dell, executive director of SEQUAL, said: "Reverse mortgages are continuing to grow as a retirement financial planning tool. With market growth at 80% over the past year, the market is close to doubling every year.
"Currently at $1.5bn, the outstanding book has continued to grow at an exceptional rate since we published our first six-monthly study of the reverse mortgage market in October 2006."
Research by Trowbridge Deloitte, who led the study, indicated that 60-70-year-olds are the fastest growing group to take up the mortgage and the lump sum is the most popular draw down method.
Under 65s accounted for almost 20% of new loans in 2006, and 65-69-year-olds for 25%. Of the $520m worth of settlements in 2006, more than 80% were lump sum and just fewer than 20% were taken in regular draw downs.
It also showed that variable rates are the most popular type of loan, but flagged an increasing use of fixed rate borrowings with 25% of new loans fixed compared with 22% in 2005 and 5% in 2004.
Most reverse mortgage business is done in NSW with 41% of the total market. Victoria and Queensland each have around 20% of the market, while Western Australia continues to grow (commanding 8% of the total market), while 9% of reverse mortgages are sold in South Australia.
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