- Heartland Bank Australia is cutting its reverse mortgage interest rate to a variable 8.88% p.a. (8.19% p.a. comparison rate*) from 10 February
- It defies the rise in interest rates across the market in the wake of last week's cash rate hike
- Heartland will also hold the interest rate for its existing reverse mortgage customers
Heartland Bank Australia is dropping its reverse mortgage interest rate, cutting the rate to 8.88% p.a. (8.91% p.a. comparison rate) from Tuesday 10 February.
It trims 0.12% from the old variable rate of 9.00% p.a. which existing customers will continue to pay.
Reverse mortgages are specialist products targeted at older Australians who own - or have significant equity - in their homes but are 'cash poor'.
They essentially allow seniors to convert part of the equity in their home to ready cash with no requirement to make regular loan repayments.
Generally, the mortgage is settled - including interest and fees - when either the home is sold, the owner goes into aged care, or dies.
Interest rates for reverse mortgages are typically considerably higher than for regular home loans as there is no clear timeline as to when the loan might be repaid.
Interest also compounds over time, meaning interest is charged on interest already owed.
See also: How do reverse mortgages work?
Growth in equity release market
Reverse mortgages, along with other so-called 'equity release' products, have seen significant uptake in Australia.
This has been fuelled by an aging population as well as escalating home values and cost-of-living pressures.
As of March 2025, reverse mortgages in Australia totalled $3.98 billion, a 90% increase over the previous 12 months.
An Ernst and Young report forecast the global equity release market would more than double by 2033.
Heartland Bank is Australia's leading provider of reverse mortgages with more than 40% market share.
The bank's chief commercial officer Medina Cicak said Heartland seeks to empower over 55s without the immediate burden of increased borrowing costs.
"We understand that financial security is paramount for retirees and we are proud to offer a specialist solution that provides flexibility during a period of economic fluctuation," she said.
"Lowering the cost of borrowing directly supports our mission to help our customers age in place with financial peace of mind and greater control over their future."
The federal government's Moneysmart website strongly advises those considering a reverse mortgage, or other equity release products, to seek independent advice before proceeding.