New applicants for Heartland Bank’s reverse mortgage products will realise lower rates while existing customers will see rates unchanged despite the central bank’s 25 basis point hike.
The bank, which holds 40% of the reverse mortgage market, dropped advertised rates on its product to 8.88% p.a. (8.91% p.a. comparison rate*) on Tuesday.
The move represents a 12 basis point drop on the previously-advertised rate.
Meanwhile, all lenders that have so far responded to the RBA’s hike are moving the other way.
Indeed, Unity Bank and G&C Mutual (both of which also offer a reverse mortgage product) announced it will impose hikes of up to 36 basis points for variable rate mortgage holders on Monday.
Reverse mortgages offer older Australians the option to borrow against equity in their home or investment property without needing to meet regular repayments.
Rather than repaying the debt like they might a regular mortgage, the interest charged on a reverse mortgage is added to the loan balance.
A reverse mortgage is typically repaid when the house is sold or the holder of the reverse mortgage moves out or passes away.
“Our decision to lower rates for new customers and hold rates for existing ones is driven by our focus on helping Australians age in place with dignity,” Heartland Bank chief commercial officer Medina Cicak said.
“We understand that financial security is paramount for retirees, and we are proud to offer a specialist solution that provides flexibility during a period of economic fluctuation.”
Heartland Bank also said it took the rising cost of retirement into consideration when deciding not to pass on the RBA rate hike.
A comfortable lifestyle in retirement would set a typical single person back $54,200 a year, while couples may be up for more than $76,500, as of the September quarter of 2025.
Those figures are up from $51,800 and $73,000 for the same period of 2024, according to the Association of Superannuation Funds of Australia (ASFA).
Image by Hoi An and Da Nang Photographer on Unsplash
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