Borrowers don’t understand reverse mortgages
Comments about reverse mortgages by the chairman of the Australian Securities and Investments Commission Tony D'Aloisio were unduly negative and were based on out-of-date research, a leading reverse mortgage provider said.
The head of RBS Reverse Mortgages, Martin Lynch, said ASIC's view of the reverse mortgage market was informed by a small number of interviews conducted over a year ago. Lynch said: “The market has moved on since then. Our own research tells us consumers have developed a sophisticated understanding of the product.”
D'Aloisio made his comments last week at the launch of a booklet explaining reverse mortgages ‘Thinking of Using the Equity in Your Home? A New Independent Guide to Reverse Mortgages and Other Equity Release Products.'
He said: “Our research shows that people find it difficult to understand these products. One of the big challenges is how to estimate the long-term cost of reverse mortgages and ensure there is enough equity left to fund future needs.“
We're also concerned that people are sometimes encouraged to borrow more money than they actually need, ultimately at a greater cost to them,” said the ASIC commissioner.
Source: The Sheet