Heartland Bank Reduces Reverse Mortgage Rates Despite RBA Increase

Effective from 10 February 2026, Heartland Bank has lowered its reverse mortgage rates by 12 basis points, bringing the new rate to 8.88% per annum (8.91% per annum comparison rate). This adjustment applies exclusively to new applicants, while existing customers will maintain their current rates, unaffected by the RBA's hike.

Reverse mortgages provide older Australians with the opportunity to access the equity in their homes without the necessity of regular repayments. Instead, the interest accrues over time and is typically settled when the property is sold or the borrower moves out or passes away. This financial product can be instrumental in enhancing retirees' cash flow and overall financial security.

Medina Cicak, Heartland Bank's Chief Commercial Officer, emphasized the bank's dedication to assisting Australians in aging with dignity. She stated, "Our decision to lower rates for new customers and hold rates for existing ones is driven by our focus on helping Australians age in place with dignity. 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."

The bank's decision also takes into account the rising costs associated with retirement. According to the Association of Superannuation Funds of Australia (ASFA), as of the September quarter of 2025, a comfortable lifestyle in retirement would cost a single person approximately $54,200 annually, while couples may require over $76,500. These figures have increased from $51,800 and $73,000, respectively, compared to the same period in 2024.

In contrast to Heartland Bank's rate reduction, other lenders offering reverse mortgage products, such as Unity Bank and G&C Mutual, have announced rate increases of up to 36 basis points for variable rate mortgage holders. This divergence underscores Heartland Bank's unique approach in prioritizing the financial well-being of retirees amidst a challenging economic environment.

For retirees considering a reverse mortgage, it's crucial to thoroughly understand the terms and conditions, including interest rates, fees, and the long-term implications on home equity. Consulting with an independent mortgage broker can provide valuable insights and help tailor financial solutions to individual needs.

Heartland Bank's proactive stance in reducing reverse mortgage rates amidst an overall rising interest rate environment reflects a strategic effort to support Australian retirees. By offering more favorable terms, the bank aims to alleviate some of the financial pressures faced by older Australians, enabling them to maintain a comfortable and secure lifestyle during their retirement years.