27 Aug 2010

Other banks expected to offer reverse mortgages

7:15 am on 27 August 2010

More banks are expected to follow ASB's lead and offer equity release loans to elderly homeowners.

The loans, also known as reverse mortgages, allow homeowners to swap equity in their homes for cash. They are popular in the United Kingdom and Australia.

The publisher of website goodreturns.co.nz, Philip MacAlister, says finance company collapses, low interest rates, and longer life expectancy, have left people short of savings in their retirement.

He expects more banks to follow ASB, the first major lender to re-enter the market after the recession.

But Grey Power spokesperson Roy Reid says the higher interest rates for the equity release loans are a drawback.