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Heartland reverse mortgage book grows 10%

Heartland Group's New Zealand reverse mortgage book grew by nearly 10% in the last financial year, as older Kiwis tap into home equity to boost their retirement income. 

Thursday, September 17th 2020, 12:19PM 1 Comment

Chris Flood

Heartland's reverse mortgage receivables jumped 9.7%, or $49.6 million, to $559.9 million. The group, which owns Heartland Bank, said the rise was driven by increased brand awareness and advertising. 

Chris Flood, chief executive of Heartland Bank, told TMM Online that the "vast majority" of reverse mortgages were sold to direct customers. In Australia, brokers provide the bulk of reverse mortgage business to the bank.

Flood believes more Kiwis want to bolster retirement income through equity release products, as people look to shore up their finances through the Covid-19 pandemic. 

"People want to retire in their own home in comfort, especially in this Covid environment," Flood said. He said borrowers typically took out reverse mortgages worth $50,000, for home improvements, new cars or medical payments. 

Heartland's Australian reverse mortgage goes from strength-to-strength. Australian reverse mortgage receivables increased by $149.1 million to $957.5 million, a rise of 18.4%.

Flood credited the strong Aussie broker market for the rise, and a shrinking pool of product providers following the Royal Commission. 

The Heartland boss is hopeful the reverse mortgage space will continue to grow in NZ, offering people more choice about their retirement lifestyle. 

"Boomers are starting to retire, and many are asset-rich and cash-poor," Flood said. "The lower interest rate environment might make people want to consider a reverse mortgage. The product can achieve fantastic outcomes, enabling people to live a better retirement lifestyle than they might have otherwise." 

Heartland Bank launched a 2.95% digital mortgage last year, receiving $50 million worth of demand for the direct product. 

The lender could re-launch the mortgage, Flood says, but Heartland is keeping an eye on where rates will settle in the coming months, with further downward pressure expected.

Flood's comments came as Heartland Group announced its full-year results today. Group profit fell from $73.6 million to $72 million in the year to June. 

Tags: equity release Heartland retirement reverse mortgages

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Comments from our readers

On 18 September 2020 at 12:03 pm Maxwell K said:
A most satisfactory result.
A most underrated stock in my view.
As a shareholder I am not surprised at the result given the quality of their CEO and management team.
Not your usual bank but one that are very quick on their feet when it comes to introducing new technology, identifying opportunities and know how to look after their customers. As Buffett says " it is only when the tide goes out you can see who has been swimming in the nude"
Heartland, thanks for keeping your bathing suit on during these unpredictable times.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 6.79 - -
Co-operative Bank - Owner Occ 8.40 6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.74 7.35 6.99
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.65 7.25 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

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