Matthew Cranston

Economics correspondent

The Morrison government will use evidence from the latest retirement income report (Chaired by Professor Deborah Ralston) to help retirees unlock equity from the family home and possibly allow first-time home buyers to tap their super early.

A growing group of Liberal MPs have already asserted that home ownership should be a cornerstone principle of the retirement system.

One of the main reasons older Australians do not draw on the wealth in their home is that it is too expensive. 

Treasurer Josh Frydenberg cited the retirement income report's emphasis on home ownership as a key foundation for a healthy retirement system.

"The report points out how important home ownership is to people's security in retirement. It points out that around 76 per cent of people over the age of 65 own their own home and that as a consequence, this allows them to have more discretionary income and it also provides an opportunity for them to draw down on the equity in their home in retirement."

The report noted that "using superannuation assets more efficiently and accessing equity in the home can significantly boost retirement incomes without the need for additional contributions".

Mr Frydenberg said: "Accessing the equity in your home can allow retirees to amp up their retirement income at a time when it suits them and amp it back down when they have more available money."

Home Safe Wealth Release, which deals in products similar to reverse mortgages, said the report's findings were encouraging. Chief operating officer Dianne Shepherd said accessing the equity built up in the home made sound financial sense.

"Government has an unprecedented opportunity to facilitate greater efficiencies in the equity release market, not only for the benefit of individuals but also the wider economy," Ms Shepherd said.

Too expensive right now

National Seniors Australia chief advocate Ian Henschke said one of the main reasons why older Australians did not draw on the wealth in their home was that it was too expensive.

"National Seniors has long been calling on the government to cut the interest rate for the existing Pension Loans Scheme [PLS] which essentially allows people to borrow against the equity in their home. It's a clear barrier," Mr Henschke said.

"This scheme is especially important for those receiving aged care, who could be using it to live more comfortably staying in their own home and out of residential aged care."

 

Matthew Cranston is the economics correspondent, based in the Canberra bureau. He was previously property editor. Email Matthew at mcranston@afr.com