Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ mortgage market could mean Baby Boomers miss out

Media Release

Flat New Zealand reverse mortgage market could mean Baby Boomers miss out on a retirement opportunity

25 August 2014

Deloitte Australia’s Actuaries & Consultants released its seventh comprehensive study of the New Zealand reverse mortgage sector today.

Supported by New Zealand’s Safe Home Equity Release Plans Association (SHERPA), the study found New Zealand’s reverse mortgage market comprised 5,300 loans, with a total book of $444 million as at 31 December 2013, compared with 6613 loans valued at $447m four years previously.

Deloitte Partner Financial Services James Hickey said: “The New Zealand reverse mortgage market is stagnant, and has been for some time. Unfortunately, this presents a very real risk that New Zealand seniors are in danger of missing out on the opportunity to live a more comfortable retirement, at home.”

Hickey compares using a reverse mortgage to other more traditional forms of releasing equity, such as downsizing: “While downsizing is perhaps the obvious option to release money in the home, for many retirees it is too great an emotional and social upheaval to just sell the family home and move to a different location. Having an option to live in their home for longer, but being able to tap into the equity in the property via a reverse mortgage, could be much more preferable for such retirees. Kiwi Baby Boomers need all available options if they are to secure a financially comfortable retirement.”

Rob Dowler, Executive Director of SHERPA said: “The market size is on a par with pre-GFC levels, while the size of each borrowing has increased the number of both borrowers and settlements is significantly down. This is largely due to fewer lenders offering the product for sale.”

“However things are beginning to change. At SHERPA we are fielding more interest in the product from potential borrowers and lenders. As the drag on growth caused by uncertain and pressured global business environment begins to ease, we think the home equity release market will pick up along with the need for new business opportunities.”

James Hickey said: “Total repayments, both full and partial, this year are 14% p.a. of outstanding loans, with the majority due to voluntary repayment and sale of property.

“This shows that a reverse mortgage is not a ‘set and forget’ product but it is actively used by its borrowers to primarily fund the first stage of their retirement.”

The majority of borrowers in New Zealand are couples (more than half), borrowing around $10k more than their single counterparts. And dispelling the myth that the product is only for very old retirees, many new borrowers are “younger retirees” between the ages of 65-74.

Hickey said: “The top use for a reverse mortgages remains debt repayment, which is almost double that of the previous year, followed by home improvement and travel. These are positive responses and show that the product can really add value to retirees when used responsibly and supported by appropriate advice.”

Dowler added: “The North Island has the highest number of reverse mortgages at 81% with Auckland the major location (14%). This is up by 20% since the 2010 report when the South Island had a 39% share, now down to 19%. Two thirds of the loans - 66% - are outside the major metropolitan areas, especially in the North Island.

Deloitte thanks all industry participants who responded to the survey, acknowledging the support of SHERPA (the Safe Home Equity Release Plans Association) in helping facilitate the survey in New Zealand.

For more information on SHERPA and SHERPA member industry participants go to http://www.sherpa.org.nz/

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Pre-Budget: Computer Emergency Response Team, Assemble!

John Key told the country's first ever Cyber Security Summit in Auckland that the government had earmarked funding set up a national Computer Emergency Response Team to help prevent and act on cyber incidents in partnership with the private sector and other organisations. More>>

ALSO:

Job Cutter Goes: Mark Weldon To Step Down As MediaWorks CEO

“When I joined MediaWorks in August 2014, I had a mandate to lead a significant change programme to bring the business back from receivership into a position where it could once again be a strong competitor in the market, with a sound and sustainable future. It was a big brief, laden with inherent challenges, but I took it in good faith and have dedicated myself fully to the goal since." More>>

ALSO:

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news