Home Equity Release: Challenges and opportunities

De Silva, A, Thomas, S, Sinclair, S and Alavi Fard, F 2016, Home Equity Release: Challenges and opportunities, Australian Centre for Financial Studies, Melbourne, Australia


Document type: Commissioned Reports
Collection: Commissioned Reports

Title of report Home Equity Release: Challenges and opportunities
Author(s) De Silva, A
Thomas, S
Sinclair, S
Alavi Fard, F
Year of publication 2016
Publisher Australian Centre for Financial Studies
Place of publication Melbourne, Australia
Subjects Welfare Economics
Finance
Abstract/Summary The Australian Centre for Financial Studies (ACFS) has today released a new report on Australia's home equity release market. The report, written by Associate Professor Ashton de Silva, Dr Sarah Sinclair, Dr Stuart Thomas and Dr Farzad Alavi Fard, all of the School of Economics, Finance and Marketing at RMIT University, identifies challenges and opportunities in developing markets for financial products that could give Australians access to their home equity in retirement. Although the superannuation system continues to build balances as it matures, managing longevity risk (the risk of outliving retirement savings) presents a growing challenge for Australian households, businesses, and governments. Innovative financial products will be necessary to address this challenge. Many households, while short on retirement savings, have substantial wealth tied up in the family home. For these households, accessing the equity in their home could be a viable, even desirable, way to supplement retirement savings. Releasing home equity could increase standards of living in retirement, provide secure investment returns for the private sector, reduce further dependence on government support, and allow retirees to 'age in place' - a widely desired option. Australia's home equity release market, which for the purposes of this report is taken to include reverse mortgages, home reversion schemes and variations of them, is very small, largely due to financial and social factors. A major conclusion drawn from the research is that both current and future retirees appear largely unaware of or uncertain about the possible relevance of these options for their retirement.
Commissioning body Australian Centre for Financial Studies
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