CBA considers ‘reverse mortgage’
The Commonwealth Bank is believed to be considering offering a reverse mortgage following the success of a similar St George Bank product. St George says almost 1,000 customers have borrowed an average $50,000 each, outperforming both number and volume estimates. St George and the Police & Nurses Credit Society are the only lenders to offer reverse mortgages in which cash-poor older people borrow against the value of the houses. St George's product allows a customer to borrow up to 20 per cent of the value of his home subject to a maximum of $100,000. The 7.57 per cent interest is not payable but compounds up to the time when the person dies or the property is sold.
St George is also considering a non-owner-occupied version of the product for people who have moved into retirement homes but still own their houses. The Police & Nurses Credit Society has offered its Easy Living Access Loan for the past three years. It has 600 borrowers, with an average age of 70, who have accessed between $20,000 and $25,000. Reverse mortgages would suit the CBA's demographic, as it has more pensioner customers than any other bank.