MortgageReverse

RBS Looking to Package Reverse Mortgage Products

imageReverse mortgage lending in the United States isn’t the only country getting special attention from consumer groups.  Martin Lynch, head of reverse mortgages, RBS Reverse Mortgages in Australia told Lending Central that consumer advocacy group CHOICE is still not a fan of reverse mortgage products.

CHOICE is the largest consumer organization in Australia, which aim is to tackle the issues that really matter to consumers, arming them with the information to make confident choices and lobbying for change when consumers are getting a raw deal says their website

Lynch maintains that the view adopted by CHOICE is “old fashioned” and does not take into account the current checks and balances (such as the stipulation that all customers consult with a legal or financial representative) and the respective guarantees of lifetime tenancy and customers never owing the bank more than the value of their property.

“CHOICE still has the perception that there’s a lot of predatory lenders out here waiting to get their hands on little old ladies’ money.  “That view was out of date ages ago,” he declares.  Lynch developed and launched RBS Reverse Mortgages (formerly ABN AMRO) in 2005.

According to the article, the reverse mortgage market in Australia is vastly different to reverse mortgage markets in the UK and US.  “The primary driver in Australia is the achievement of low interest rates. In the US and UK the competitive driver is maximizing the amount that can be lent,” says Lynch.

“Here consumers borrow very conservative amounts by comparison. Typically in Australia 60-year olds can borrow less than half of what they could if they lived in the US or UK, which means the compounding issue here is less severe.”

“We’re also noticing that the age people take the product out is very different. The average age of our customers is 74 (40% of which are couples, 40% single women and 20% single men); whereas in the UK the average age is 68. Here people are encouraged to explore other avenues before turning to a reverse mortgage.”

RBS Reverse Mortgages is currently looking at diversifying by bringing packaged products into the equation.  A car leasing package as well as healthcare solutions are being considered.  “These packages are an ideal adjunct to the monthly income feature because suppliers need to know that monthly payments will be forthcoming,” he says.

“Many reverse mortgagees don’t have an income and therefore they can’t get credit for these things. But with the Royal Bank of Scotland behind the reverse mortgage suppliers know that the income will keep coming.”

I think it’s a interesting idea but with so much attention being put on cross selling here in the US, I don’t think we are anywhere close to these types of packaged products. 

RBS Reverse Mortgages: options and diversification

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