In recent years, reverse mortgages have gained considerable momentum as a way for retirees to unlock the equity in their home to fund retirement. But is this the best option or is it simply a way for the banks to profit yet again? Given that the value of the property is locked in at the time the retiree applies for the mortgage, the only one profiting from the capital growth in the future is the bank. Some might say that the benefit to the retiree is that they not only receive an annuity from the equity in the property but they can also remain living in their home. However, once the annuity runs out not only has the retiree lost their home but the income to continue to fund their retirement. In my opinion I believe we should be encouraging retirees to use the equity in their home to invest in assets that create income and capital growth rather than erode the value of their assets. Not only will retirees retain the benefit of the capital growth in their home, but also gain from being able to adequately fund their retirement. 

 So what is happening on the market?

I have previously mentioned that price travels at a certain speed in percentage terms over a period of time, and that the current market has been travelling at twice the speed for more than twice as long as it did following the March 2003 low. However, we are now seeing signs of the market slowing which could indicate that the fall I have been expecting may occur soon. Between 6 March and 18 April the market rose 10.25% over 43 days while over the last 29 days it has only risen 2.24% as a result of the market really only trading sideways for two of the last four weeks.

Interestingly, in 2006 the market peaked on 10 May 2006 before falling heavily into June 2006 and the current high on our market occurred just over a week ago on 9 May at 6376.90 points. For the market to prove it is still bullish, price needs to move through the current high of 6376.90. If it fails to do this over the next week it is highly likely that the market will move down to create the low I have been expecting.