Australian retirees do not seem to be too eager to access their home equity despite easy access through the Home Equity Access Scheme and reverse mortgages.
A study by National Seniors Australia and Challenger shed light on the importance of homeownership among Australian retirees.
The study found that only 2% of retirees had accessed their home equity, while around two in three said it is important to leave their home as a bequest upon passing.
Around 80% of retirees owned their home outright while 11% still have a mortgage, which includes those who accessed their home equity through a reverse mortgage. The remaining are still renting their home.
National Seniors director of research John McCallum said comfort in retirement is higher among those who own their home compared to retirees who do not.
“At older ages, the security of the home was more important than high savings levels in achieving comfort,” he said.
Are retirees willing to access their home equity?
While only a very small share of retirees accessed the equity in their homes, around 19% said they might consider doing it through the Home Equity Access Scheme and reverse mortgages.
According to the study, men were more likely than women to consider or use a reverse mortgage.
Furthermore, being younger and having savings less than $500,000 were associated with greater willingness to access their home equity.
Those who are willing to access their home equity through a reverse mortgage cited the following uses:
- Medical needs (55.7%)
- Everyday living expenses (52.9%)
- Care needs (50.1%)
- Travel (27.2%
- Higher standard of living (26.9%)
Still, 79% of retirees said they would not consider using a reverse mortgage.
The study collated some of the responses from the respondents about their sentiments on reverse mortgages — most of these were strongly negative.
Respondents pointed out that reverse mortgages are likely to “prevent passing on the full value of the home after death”.
This correlates to the earlier finding that most retirees would want to leave the home as a bequest.
—
Photo by studioroman on Canva.
Collections: Mortgage News Reverse Mortgage
Share