Reverse mortgage lenders report modest growth

Reverse mortgage lenders settled A$317 million of loans in 2011 - a fall of 1.5 per cent from the sector's 2010 performance.

According to the latest Deloitte and Senior Australian Equity Release Association (Sequal) survey, released yesterday, the value of outstanding loans rose 10.7 per cent, from $3 billion to $3.3 billion.

A significant portion of that increase ($200 million) was due to compounding interest, not new business.

The number of outstanding loans rose 1.9 per cent, from 41,600 to 42,410.

The chairman of Sequal, John Thomas, said there were five lenders active in the market.

The 5000 people who took out reverse mortgages in 2001 borrowed an average of $63,600. Their average age was 75.

The market has recovered from its slump in 2009, when settlements fell to $264 million, but it is still well short of its peak year, 2006, when settlements hit $520 million.