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A survey by reverse mortgage brokerage Seniors First found 33.7 per cent of Australians aged over 55 had put off plans to sell their home, while more than six in 10 (62.2 per cent) said they would prefer to release equity through a reverse mortgage rather than sell in the current market.
Confidence in selling wanes
Seniors First said weaker market conditions, falling auction clearance rates and uncertainty around capital gains tax had left many older Australians reconsidering whether now was the right time to downsize.
Just 27.3 per cent of respondents believed they could achieve the price they wanted if they sold their home today.
Seniors First chief executive Darren Moffatt said confidence, rather than the desire to downsize, had become the biggest hurdle.
“For a long time, downsizing has been seen as the natural next step for older Australians looking to unlock wealth from their home,” Moffatt said.
“What is changing is confidence. People are taking more time, watching the market closely and looking into alternative options before making major housing and retirement decisions.”
The findings come as auction clearance rates continue to weaken, averaging 47.9 per cent over the past week, down from 71.9 per cent during the same period last year.
According to the Australian Bureau of Statistics, more than 5.5 million Australian home owners are aged over 55.
Looking beyond downsizing
The survey also indicated a growing interest in equity release products as home owners seek to access wealth tied up in their homes without selling.
Federal government data showed loans through the Home Equity Access Scheme increased by 21 per cent over the past 12 months.
“We are seeing growing interest from home owners seeking greater flexibility and looking for ways to access housing wealth without putting their home on the market,” Moffatt said.
“Rather than feeling pressured to sell, more people are taking the time to understand their options and make decisions that suit their circumstances.
“For many, that means accessing a portion of their home equity through reverse mortgages while continuing to live in the home they know and love.”
Interest among lenders increases
This consumer interest has not gone unnoticed by other lenders in the space.
This month, non-bank lender Homesafe rolled out its equity release product to home owners across regional Victoria, while Household Capital expanded its reverse mortgage portfolio through the acquisition of a loan book from Macquarie Bank.
Following strong demand, Brighten has also fast-tracked the launch of its new reverse mortgage products following a successful pilot, while Clinch has taken a different approach with its Easy Equity offering.
A new lender has also launched, with plans to introduce a challenger product into the market in December.
[Related: CAFBA pushes for $150k instant asset write-off cap]
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