Older Australians overlook reverse mortgages despite $3 trillion in home equity

Australians over 60 are sitting on a collective $3 trillion in home equity.

On top of that, they have around $600 billion that could be unlocked through structured equity release products to boost retirement incomes and help older Aussies stay in their homes for longer, a new report has found.

But they are used to access only about one per cent of the potential equity available to eligible Australian households, the Deloitte 2026 Australian Reverse Mortgage Survey found.

What are reverse mortgages?

A reverse mortgage is designed for older Australians, allowing asset rich but cash poor retirees to unlock some of their home equity without the need to sell their home.

Instead, the loan is paid over time, with the interest charges compounding onto the loan balance.

The move can provide cash flow later in life, but more of that later.

Despite home equity release products being identified by the federal government's 2020 Retirement Income Review as an underutilised way to boost retirement incomes and reduce the budgetary burden of the age pension, older Australians are overlooking this financial strategy.

Produced with lenders Heartland Australia Bank, Gateway Bank and Inviva, the report found that reverse mortgage volumes across the private and public sector totalled $5.5 billion as at 30 June 2025, representing more than 40,000 households with a reverse mortgage product.

The volume of new reverse mortgages taken out by Australian households in the 12 months to 30 June 2025 was around $750 million, with more than 8,000 households accessing a reverse mortgage product for the first time during this period.

Reverse mortgages are available to homeowners nationally, depending on the lender. But they are used to access only about 1 per cent of the potential equity available to eligible Australian households.

Income boosters

Deloitte Australia partner and survey lead James Hickey points out that the federal government's 2020 Retirement Income Review identified voluntary savings, including home equity, as the third pillar of the retirement income system alongside the age pension and superannuation savings.

"Equity release products such as reverse mortgages and the government's own Home Equity Access Scheme were identified as being able to significantly boost retirement income and support retirees' standard of living. However, it noted that usage of such products was low," Mr Hickey said.

"It's clear that an established market already exists for Australians to use equity release products like a reverse mortgage to access equity in their homes with needing to sell their home. However, current low uptake indicates many don't know about the product or understand how it may help them meet their financial goals," Mr Hickey said.

The average amount of equity accessed by households that took out a reverse mortgage with a private lender in the 12 months to June 2025 was $150,000.

This ranged from $125,000 for those aged 65 years or younger, up to around $220,000 for older borrowers aged above 80.

Expressed as a loan-to-value-ratio, most new reverse mortgages entered into by households using a private sector lender were 15 per cent.

Where its being spent

Gateway Bank confirmed that many of its customers used their borrowings for renovations, buying a new car, travel or to supplement their income.

"Housing affordability challenges also mean that more households are entering retirement with traditional mortgage debt that requires servicing," said Adam Norman, chief marketing officer at Gateway Bank.

"These households are increasingly seeking to transfer this debt to a reverse mortgage which requires no ongoing servicing, although the account balance grows with interest."

The Deloitte survey shows that customers are using reverse mortgages for specific needs, according to Medina Cicak, chief commercial officer at Heartland Bank Australia.

"Older Australians are not drawing more than required. On average, they access around half or less of their available equity. This indicates (for need for) a considered and prudent approach to how the product is used, allowing customers to retain flexibility and ensure their future needs can be met," Ms Cicak said.

ASIC's MoneySmart website provides consumer information on reverse mortgages. It recommends checking your eligibility for the age pension and your ability to afford to pay for future living expenses, medical bills and home maintenance.