One Lender Reports About 55% of New Reverse Mortgage Business. ASIC’s Calculator Step Sits Before Your Preliminary Assessment, Not After

Heartland Group Holdings released its FY2026 result on 19 August, and the broker trade press picked up the Australian detail the following week. The line that matters to the mortgage channel is not the profit rebound. It is the concentration.

Heartland reported it holds more than 40% of the Australian reverse mortgage market and wrote roughly 55% of new business over the year, with Australian reverse mortgage receivables reaching A$2,371 million — growth of 19.7%. The Adviser reported that Australian reverse mortgage originations rose 35.8% to $548.2 million and that Heartland’s broker network expanded by more than 20% across the year. Reporting on the results presentation put FY2027 Australian reverse mortgage growth guidance above 18%; The Adviser reported the target as 20%.

Set the market-share number beside the broker-network number and the practical consequence is obvious. More residential brokers are being introduced to equity release this year than in any recent period, most of them through one lender’s accreditation, and a large share of them will be writing their first reverse mortgage.

That is where the exposure sits — and it is not where most brokers look for it. A reverse mortgage is not a standard home loan with an unusual repayment structure. It carries a statutory step that has no equivalent anywhere else in your residential process, and that step lands earlier in the file than almost anyone expects.

The step that sits before your preliminary assessment

Section 133DB of the National Consumer Credit Protection Act 2009 requires equity projections to be made and shown to the consumer before an assessment of unsuitability about a reverse mortgage. ASIC’s guidance on using its reverse mortgage calculator states it directly:

Read the two assessments in that sentence separately. The final assessment is the credit provider’s. The preliminary assessment is the credit assistance provider’s — yours. ASIC’s calculator instructions include a step written specifically for the broker side of the transaction: “If you are a broker, select the lender whose reverse mortgage you are providing credit assistance in relation to.”

The ordering is the part brokers get wrong. In a standard residential file, illustrations and comparisons are things you produce to support a recommendation you have already begun forming. Here, the projection is described as an input to the assessment. Generating it after you have formed a view, or producing it only as a closing document once the client has said yes, inverts the sequence the section describes.

The three scenarios, and why the second one matters most

ASIC’s guidance sets out three scenarios that must be shown to the consumer, each with prescribed assumptions:

1. Scenario 1 — “How much a consumer’s debt will increase over time and the effect on the equity they hold in their home”, using 3% annual property growth and either the 7% default interest rate or the known annual percentage rate.
2. Scenario 2 — “How a consumer’s equity will be affected if their home value remains constant over time”, using 0% annual property growth and either the 7% default rate or the known annual percentage rate.
3. Scenario 3 — “How a consumer’s equity will be affected if interest rates are 2% higher”, using 3% annual property growth and either a 9% default rate or the known annual percentage rate plus 2%.

ASIC’s guidance also states that “you must also provide the consumer with a printed projection of each scenario”, and describes that as separate from the obligation to show or give the projections — though it may be satisfied where the projections are given in printed form. Delivery by email, mail or another agreed written or electronic method is contemplated.

Scenario 2 is the one that does the real work in a client conversation, and it is the one a broker is most tempted to skate past. A zero-growth assumption is not a doomsday case. Cotality’s national Home Value Index has been recording monthly falls through the middle of 2026, and a flat decade is well within the range of outcomes any adviser should be able to sit with a client and discuss. The compounding runs regardless of what the property does. Scenario 2 is where a client sees the two lines diverge without any market drama to blame it on.

What the negative equity protection actually protects

Sections 86A–86F of the National Credit Code provide negative equity protection: the amount repayable to the lender will not exceed the market value of the property at the time it is sold. ASIC’s MoneySmart notes the protection applies to reverse mortgages taken out since 18 September 2012, and describes the effect plainly — “you cannot owe the lender more than the value of your home. When your home is sold, the lender must accept the sale proceeds as full settlement of the debt.”

A broker who leads with “you can never owe more than the house is worth” and stops there has given the client the reassuring half of the picture and skipped the half the legislation is built around.

Section 133DC of the same Act deals with the reverse mortgage information statement — the document setting out how the loan works, how interest is calculated and what a borrower should consider. Treat it as a required element of the file, not a brochure.

A concentrated market is a Best Interests Duty problem, not just a panel problem

When one lender reports roughly 55% of new business in a product category, the odds are high that the only reverse mortgage accreditation on your desk is that lender’s. That is a commercial reality, not a compliance failure. But it changes what your file has to demonstrate.

Best Interests Duty obligations — set out in the Act and in ASIC’s Regulatory Guide 273 — do not soften because a market is concentrated. If anything, a thin panel raises the evidentiary bar, because “it was the only product I could access” is a statement about your accreditations, not about the client’s interests. A defensible file in this product needs to show three things, in order:

• Whether equity release was the right category at all. Downsizing, a family arrangement, a smaller conventional loan where servicing genuinely exists, or the Australian Government’s Home Equity Access Scheme administered by Services Australia are all live alternatives for the same client problem. You are not licensed to advise on the Scheme, and you should not try — but a file that never records that it was considered and referred is a file with a gap.
• Whether the amount and the drawdown structure were right. Lump sum versus instalments changes the compounding profile materially. This is where the projections stop being a compliance artefact and start being an advice tool.
• Why this lender. If the honest answer is limited accreditation, the honest file note says so and says what you did about it — including whether you referred the client to someone with a broader panel.

That last point is uncomfortable and it is the right answer more often than the channel likes to admit. Referring a client out of a product you can only place one way is not a lost file. It is the cheapest professional indemnity you will ever buy.

The conversations that actually decide the file

Reverse mortgage files fail for human reasons far more often than credit reasons. The borrower is typically well into retirement — MoneySmart observes that most lenders do not offer a reverse mortgage to anyone under age 60 — and the decision reaches further into a family than a standard refinance does.

The family conversation. Adult children are usually the ones who raise a complaint years later, and they raise it about the equity, not the interest rate. Whether or not the client wants family involved is their call. Whether you recorded asking is yours.

Means testing and entitlements. A lump sum can interact with age pension assessment. This is outside a credit licence. Refer to Services Australia or an appropriately licensed financial adviser and note the referral. Do not estimate it in a meeting.

Aged care and future moves. The projections run for years. If the plausible horizon includes a move into care, that changes the analysis and belongs in the notes.

What to review this week

If your aggregator has added a reverse mortgage accreditation in the past twelve months, or you have one sitting unused, work through this before the next enquiry lands:

1. Ask your licensee, in writing, how the section 133DB projection obligation is discharged on your files — who runs it, where it is stored, and what evidence is expected at audit.
2. Run ASIC’s reverse mortgage calculator once, on a dummy file, today. Working out where it sits in your process during a live client meeting is not the plan.
3. Check the sequencing in your CRM. If your workflow generates the preliminary assessment before there is anywhere to attach a projection, your process and the section are in the wrong order.
4. Build the Scenario 2 conversation before you need it. Flat property values plus compounding interest — practise saying it out loud.
5. Write the accreditation limitation into your template file note. A concentrated market is not a defence; a documented one is a disclosure.
6. Set your referral paths now for Services Australia’s Home Equity Access Scheme, financial advice and legal advice, so the referral is a step rather than an improvisation.
7. Confirm the reverse mortgage information statement under section 133DC is on your document checklist as a required item.

Frequently asked

The strategic read

The growth in this segment is real and the demand behind it is structural. Brokers who build genuine competence in later-life lending will have a durable book in a market where volumes elsewhere are contracting. That is the opportunity, and Heartland’s FY2026 numbers are the evidence for it.

But this is a product where the compliance architecture was written specifically because the risk is slow, invisible and only becomes obvious to the client’s family a decade later. The legislation responded by putting a projection obligation in front of the assessment rather than behind it. The brokers who will still be writing these profitably in five years are the ones who treat that ordering as the point of the product rather than an administrative hurdle in front of it.

Get the sequence right, document the panel limitation honestly, and refer what sits outside your licence. That is the whole discipline.