CBA the final big four lender to axe reverse mortgages

CBA and subsidiary Bankwest are axing reverse mortgages, making them the last of the major lenders to pull out of the $3.1 billion sector.

Beginning next year, the service will no longer be offered, however, it will continue providing it to existing borrowers.

It follows in the footsteps of Westpac Group and Macquarie Bank who withdrew from the market late last year.

This leaves only Heartlands Seniors' Finance, IMB Bank and P&N Bank as the remaining significant players, according to Canstar analysis.

However, the federal government is entering the sector with a low-cost reverse mortgage scheme providing a public sector alternative.

Demand for the products is predicted to grow in an ageing community where seniors have billions of dollars in equity in their family home that can be tapped by a reverse mortgage, according to regulators.

CBA predicts 20% of Australians will be over 65 within 12 years.

Selling of the products, recently came under fire from regulators concerned about the quality of advice.

Improved scrutiny and advice and tougher regulations are expected, particularly in the wake of expected improvements to borrowing standards in the wake of the banking royal commission.