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Mortgages

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Bluestone launches reverse mortgages

Bluestone is about to launch its equity release product into the New Zealand market, with the offer of "life-time interest rate protection".

Tuesday, October 17th 2006, 8:31AM
The interest rate protection means they borrowers know exactly how much their loan will be worth in 10, 20 or 30 years time.

Bluestone is funded in New Zealand by Westpac Institutional Bank proving solid and secure backing for its commitments.

Bluestone’s arrival signals a seachange for retiring New Zealanders. “For the first time, retirees can have a lifetime fixed or capped interest rate on their reverse mortgage. Providing certainty and protection against fluctuating interest rates is an important long term strategy with this form of equity release,” says Bluestone CEO Peter McGuinness.

“Most older New Zealanders are on fixed incomes. Our key point of difference will be providing these customers with equal certainty around their funds being released.”

Funds from a Bluestone reverse mortgage can also be taken as annual instalments, rather than a lump sum, meaning they can be drawn down sensibly to supplement income.

More and more New Zealanders are investigating a diverse range of options for retirement funding. With more than $71 billion tied up in homes owned by the over 60s – coupled with a significant lack of retirement savings – all the ingredients are present for a move towards greater use of reverse mortgages.

According to research recently commissioned by Bluestone, Trowbridge Deloitte estimates that less that $10 million of post-retirement equity release business was signed in New Zealand in 2003. This has since grown to more than $150 million a year.

A$600 million was sold in Australia last year, with the billion dollar mark fast approaching.

The research also indicates that on average New Zealanders have less than $60,000 in retirement savings per household, significantly short of the $300,000 to $400,000 required to secure a fully funded retirement.

Bluestone believes the New Zealand market has strong growth potential.

“In the past, there has been only limited product development because the market has been dominated by one player,” McGuinness says.

“There is currently no significant choice around interest rates for reverse mortgages in New Zealand. This is traditionally a fixed rate market for mortgages, and potentially more so for reverse mortgages. In the UK more than 90 per cent of reverse mortgages are ‘fixed for life’.”

More than 70 per cent of people older than 65 own their own home outright. The Trowbridge Deloitte research indicates that up to 10 per cent of the $75 billion in equity could be released through financial products such as reverse mortgages, Bluestone says.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.25 2.59 2.89
ANZ 4.44 2.85 3.19 3.49
ANZ Special - 2.25 2.59 2.89
ASB Back My Build 1.79 - - -
ASB Bank 4.45 2.25 2.59 2.89
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.25 2.55 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.85 3.15 3.39
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online ▼1.95 ▼1.85 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.40 3.64
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.55 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.69 2.99 3.29
SBS Bank Special - 2.19 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.25 2.59 2.79
The Co-operative Bank - Standard 4.40 2.75 3.09 3.29
TSB Bank 5.34 3.05 3.29 3.59
TSB Special 4.54 2.25 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 2.85 3.19 3.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 4.59 - - -
Westpac Special - 2.25 2.59 2.89
Median 4.55 2.68 2.99 2.89

Last updated: 17 May 2021 9:05am

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