Retirement
Why are Australians rejecting popular loan options?
Reverse mortgages are growing in popularity overseas, but the take-up is low among Australians, and the regulators are circling.
Why are Australians rejecting popular loan options?
Reverse mortgages are growing in popularity overseas, but the take-up is low among Australians, and the regulators are circling.
Many Australian retirees are cash-poor but asset-rich, meaning they have substantial equity in their homes, but limited cash in the bank.
Despite a record-high property market since the GFC and historically low interest rates, retirees are still reluctant to release the equity in their homes, according to the University of New South Wales (UNSW).
“While economic theory predicts that households would demand reverse mortgages to improve retirement funding, the take-up rates for reverse mortgages are low in Australia and internationally,” said senior research fellow at UNSW, Dr Katja Hanewald.
What is a reverse mortgage?
A reverse mortgage allows home owners to borrow money using the equity in their homes, including their principal place of residence, as security.
Home owners aren’t required to make repayments while they still live in their home. Interest is still charged as normal, but it can compound and be added to the outstanding loan balance.
Reverse mortgages are more popular with older home owners, because the loan must be repaid in full when the home is sold or moved out of, typically triggered when the home owner dies or moves into aged care.
Popularity overseas
According to ASIC, consumer demand for mortgages has gradually risen since the 2008 GFC, but most Australian consumers still have negative perceptions.
“A common view amongst retirees – and even many finance brokers and lenders – tends to be that equity release products take advantage of vulnerable elderly people, or that they are often used by family members to do so,” ASIC said in its 2018 review of reverse mortgage lending in Australia.
While fewer investors have taken up the opportunity to release the equity in their home domestically, internationally it has been used as a popular means of funding retirement.
Dr Joshua Funder, CEO and founder of Household Capital, said: “Overseas markets have been expanding rapidly to provide access to home equity to fund retirement.”
Scepticism builds
The corporate regulator has flagged the risk of elder abuse with reverse mortgage structures.
In a 2018 report, ASIC found that borrowers were on average 75 years or older when they took out a reverse mortgage, and the corporate regulator’s loan file identified 15 loan applications where a lender could have detected signs of abuse.
Signs included money being transferred to a non-borrower, the involvement of children in the application, file notes indicating abuse by a sibling of the borrower.
RELATED ARTICLES
About the author
About the author
Retirement Planning
Retirement happiness on the rise, but cost-of-living worries cloud confidence
Australians aged 60 and over are generally positive about their retirement, but concerns about the rising cost of living continue to impact their lifestyle and financial security, according to the ...Read more
Retirement Planning
Australia's retirement system nears tipping point as withdrawals surpass contributions
State Street has unveiled a significant new research series, "Reimagining Retirement," which highlights a critical juncture for Australia's retirement system. The study, released on 1 April 2026, ...Read more
Retirement Planning
Online wills initiative aims to boost superannuation and retirement engagement
In a bid to increase engagement with superannuation and retirement planning, Aware Super has expanded its online wills service, following a successful pilot program. The initiative, launched in ...Read more
Retirement Planning
New digital platform revolutionises retirement planning for Aware Super members
A groundbreaking digital platform by Aware Super is transforming the way retirees plan and manage their pensions, with significant results already seen in the pilot phase. The tool, named Retirement ...Read more
Retirement Planning
The retirement mortgage squeeze: how one bank turned a demographic risk into a strategic edge
An increasing share of Australians are entering their 60s still paying off mortgages, just as living costs and interest charges stay stubbornly high. For banks, super funds, retailers and ...Read more
Retirement Planning
The retirement mortgage crunch: what it means for banks, retailers and policy in Australia
A growing share of Australians are carrying mortgages into their 60s and beyond, colliding with persistent cost-of-living pressures and a “slow grind” macro outlook. This isn’t just a social story; it ...Read more
Retirement Planning
Majority of Australians still unsure about their retirement prospects
A recent survey conducted by MFS Investment Management® has shed light on the ongoing uncertainty faced by many Australians regarding their retirement plans. Despite a slight increase in confidence ...Read more
Retirement Planning
Wage growth steadies as businesses navigate economic challenges
In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers ...Read more
Retirement Planning
Retirement happiness on the rise, but cost-of-living worries cloud confidence
Australians aged 60 and over are generally positive about their retirement, but concerns about the rising cost of living continue to impact their lifestyle and financial security, according to the ...Read more
Retirement Planning
Australia's retirement system nears tipping point as withdrawals surpass contributions
State Street has unveiled a significant new research series, "Reimagining Retirement," which highlights a critical juncture for Australia's retirement system. The study, released on 1 April 2026, ...Read more
Retirement Planning
Online wills initiative aims to boost superannuation and retirement engagement
In a bid to increase engagement with superannuation and retirement planning, Aware Super has expanded its online wills service, following a successful pilot program. The initiative, launched in ...Read more
Retirement Planning
New digital platform revolutionises retirement planning for Aware Super members
A groundbreaking digital platform by Aware Super is transforming the way retirees plan and manage their pensions, with significant results already seen in the pilot phase. The tool, named Retirement ...Read more
Retirement Planning
The retirement mortgage squeeze: how one bank turned a demographic risk into a strategic edge
An increasing share of Australians are entering their 60s still paying off mortgages, just as living costs and interest charges stay stubbornly high. For banks, super funds, retailers and ...Read more
Retirement Planning
The retirement mortgage crunch: what it means for banks, retailers and policy in Australia
A growing share of Australians are carrying mortgages into their 60s and beyond, colliding with persistent cost-of-living pressures and a “slow grind” macro outlook. This isn’t just a social story; it ...Read more
Retirement Planning
Majority of Australians still unsure about their retirement prospects
A recent survey conducted by MFS Investment Management® has shed light on the ongoing uncertainty faced by many Australians regarding their retirement plans. Despite a slight increase in confidence ...Read more
Retirement Planning
Wage growth steadies as businesses navigate economic challenges
In a sign that the Australian labour market may be finding equilibrium, wage growth has stabilised this quarter, according to Employment Hero's latest data. This development comes as employers ...Read more
