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Mortgages

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Reverse mortgages set new record

New Zealand's leading Home Equity Release (HER) provider has just passed a milestone.

Friday, April 8th 2022, 12:47PM

by Eric Frykberg

Heartland Bank says it has helped 20,000 customers gain reverse mortgages.

It says enquiries into reverse mortgages are also increasing, along with the numbers of mortgages actually granted.

Heartland attributes this trend to the continued rise in cost of living, along with increased awareness and acceptance of reverse mortgages in principle.

In celebrating its progress, Heartland cited the case of a Taupo couple in their mid 70s.

After consulting an adviser, they took out a reverse mortgage to pay off a small standard mortgage, upgrade the car and build a garage.

Heartland said they were happy with the process.

HER lending has been growing steadily, by 16% in two years, according to figures from the Reserve Bank (RBNZ).

But it is still small in quantum: 0.14% of total lending.

However, most advisers expect the market to increase further, because some people have no choice.

Information released by the Financial Services Council says many people run out of savings or investments 10 years after retirement, and have to fall back on NZ Super.

But research by Massey University shows NZ Super is not enough to pay for even the most modest lifestyle.

Some advisers describe people coming to them for reverse mortgages who are fed up with being broke.

But their venture into HER is restrained: at Heartland they are taking out loans at just 10% average on the value of their home.

And they are doing so quite late in life, 78 years old on average.

In many cases, people secure the right to take out money under a reverse mortgage, but do not actually withdraw the cash.

Instead, they keep the entitlement to the money in readiness for a rainy day, in a manner that parallels an overdraft facility.

Meanwhile, the standard reverse mortgage system is about to be challenged by the company, Lifetime Retirement Income.

This firm will reveal a new scheme under which people sell a tiny portion of their home, year by year, for 10 years.

While the home owners lose equity – up to 35% - they incur no interest payments, which compound under standard reverse mortgage schemes.

Lifetime says this certainty can bring greater peace of mind.

Tags: mortgages

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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 7.79 7.39 7.25
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 7.75 7.35 -
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 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
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 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

Last updated: 20 May 2024 10:01am

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