Several years ago there were a number of active players in the market. Sentinel was the leader, but other providers included Propertyfinance Securities, Bluestone, Dorchester, Westpac and SBS.
Sentinel is doing little lending as it waits for the securitisation market to pick up to provide funding again. Dorchester, which was funded by Kiwibank has pulled out of the market recently.
Bluestone and PropertyfinanceSecurities have disappeared, while Westpac, which offered a branded Bluestone product, exited the market several years ago.
The only provider still involved is SBS.
ASB says it is introducing its product, HomePlus, in response to demand from its senior customers.
Chief executive, Customers Markets and Products, Catherine McGrath says that in Australia home equity release loans are becoming more common.
"ASB is committed to setting the highest possible standards to ensure the protection of our customers.
"HomePlus complies with the voluntary code of practice developed by the Office of Senior Citizens. We will also set new ethical standards, particularly around ensuring borrowers fully understand the arrangement into which they are entering, providing guarantees around lifetime occupancy and promising people never have to repay more than the value of their property.
"The 90 day cooling off period also ensures borrowers who change their minds can repay their HomePlus loan.
ASB warns that home equity release is not for all senior customers. "We recommend it only for those customers who have no other means of accessing cash."
"Releasing funds from other assets if available will invariably be a better option than taking out a home equity release loan.
"However, for those who do not have other options it can allow them to maintain an independent lifestyle, stay in their own home longer, or undertake necessary repairs that are otherwise beyond their financial means.
The HomePlus interest rate is 7.75%. It is a variable rate loan and will fall and rise in line with ASB's cost of funding HomePlus loans.
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