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Sentinel Lifetime Loan Index For Auckland

Media Release
23 January 2006

Sentinel’s Loan Book Doubles in 2006, as Consumers Home Equity Release Market Grows – Auckland Consumers Support the Trend

Senior retired people are seeking out home equity loans in steadily greater numbers to provide funds for their retirement, according to market leader Sentinel Limited.

Sentinel, which is three years old and has 90% of the home equity release market, experienced a nearly 100% increase in its loan book in 2006 over 2005 – from $89 million (at the end of 2005) to $176 million (at the end of 2006).

This represented a growth of 94% of numbers of loans – from 1801 loans at the end of 2005 to 3493 loans at the end of 2006.

In the Auckland region (central, North, South, East, West and Rodney) the numbers of consumers taking on these loans jumped from 617 in 2005 to 1080 in 2006 (cumulative).

This growth is set against a background of Government consultation on the home equity release sector. Government is seeking to determine tighter regulations for providers of these loans (see www.osc.govt.nz).

Releasing Sentinel’s new annual Lifetime Loan index for New Zealand today, managing director Richard Coon said:

“We believe around 3,000 new seniors will apply for these specialist loans in 2007 throughout New Zealand. The Government’s timing on consultation for the sector to ensure consumers are well protected is right on the mark, given this burgeoning financial tool.

“Our research shows seniors are borrowing against their major asset responsibly and conservatively. For instance the average lump sum initial drawn down typically represents around 13% of the value of the property, leaving plenty of value in their homes now and for the future.

“Many borrowers use their loans to fix up or improve their homes – including painting them. Our research shows, for instance, that after retirement most New Zealand homes are only painted once every twenty years which is simply not enough to maintain the condition and value of a home. A bit of maintenance helps conserve the home’s value but people struggling on only Government superannuation can’t afford the upkeep. Seniors using these loans are also taking them out to pay off credit card or other high interest debt, thereby wisely consolidating debt at a lower interest rate. Some are also buying a more reliable car or taking a holiday, often to see relatives overseas.”

More…….

Sentinel index ….2

The average equity release initial loan drawn down has dropped slightly to $39,708 from $41,001 the year prior. “This is because in response to our customers, we dropped the minimum loan size from $20,000 to $10,000 and introduced an Express Top Up facility allowing people to release money as an when they need it, rather than all up front,” said Mr Coon.

The average age of borrowers New Zealand wide is now 72 years (down from 73 years in 2006) – the oldest first time borrower being 95 years. The amount that can be borrowed increases with age.

Mr Coon said that in many ways New Zealanders were better placed than commentators on retirement suggested with their retirement savings.

“People in New Zealand save for retirement through their homes and are encouraged to do so through out tax system. There is still high home ownership in New Zealand,” he said. “This means they have a good nest egg, but have until recently had no firm idea how to access these funds in retirement. Increasingly too we’re seeing a lot of people struggling to manage on New Zealand Super. Home equity release is allowing easier access, and is widely used in many countries as a legitimate financial tool for doing so.


National Index*
Sentinel Lifetime Loan Index 2005 2006
Average property value of borrowers $293 050 $307 705
Average initial drawn down $41 001 $39 708

Borrowers
Average Age 73 72
Married 68.9% 69.3%
Single – male 8.6% 8.6%
Single – female 22.5% 22%

# Usages of Money
Home Improvement 55% 55%
Consolidate Debt 24% 25%
Holiday 26% 25%
Extra Income 21% 18%
Purchases for the home 15% 12%
New Car 29% 24%
Gifts to family and friends 6% 5%
Other 0% 0%
Immediate healthcare needs 12% 11%
# [Please note: these percentages do not add to 100 because people are using their loans in multiple ways i.e. there is more than one use they have for them].

More…
Sentinel index….3


Features of the Index:
• The highest average property values which were borrowed against in 2006 were in Auckland East (with an average property value of $513,753 average property value) and Rodney (with an average property value of $538,200).
• The lowest average property values which were borrowed against in 2006 were in West Coast South Island area (with an average property value of $202,364).
• The area with the highest average initial drawn down was the Far North with $70,197.
• The average initial drawdown is around 13% of property value. On the West Coast, however, the average initial draw down was the highest proportion of property value – at 18% of average property value.
* Regional and city breakouts are available

Auckland - Central

Sentinel Lifetime Loan Index 2005 2006
Average property value of borrowers $532 146 $474 306

Average initial drawn down $60 346 $55 164


Borrowers
Average Age 74 73
Married 58.6% 36.4%
Single – male 8.6% 22.7%
Single - female 32.8% 40.9%

Usages of Money
Home Improvement 56% 61%
Consolidate Debt 17% 33%
Holiday 29% 53%
Extra Income 17% 25%
Purchases for the home 17% 11%
New Car 12% 14%
Gifts to family and friends 10% 11%
Other 2% 3%
Immediate healthcare needs 12% 14%

More….

Sentinel index….4

Auckland - East

Sentinel Lifetime Loan Index 2005 2006
Average property value of borrowers $401 586 $513 953

Average initial drawn down $53 573 $59 560


Borrowers
Average Age 75 73
Married 65.1% 58.1%
Single – male 9.3% 14.5%
Single – female 25.6% 27.4%

Usages of Money
Home Improvement 59% 35%
Consolidate Debt 24% 30%
Holiday 14% 33%
Extra Income 17% 16%
Purchases for the home 28% 9%
New Car 38% 23%
Gifts to family and friends 7% 16%
Other 0% 0%
Immediate healthcare needs 24% 9%

Auckland – North
Sentinel Lifetime Loan Index 2005 2006
Average property value of borrowers $400 286 $469 773

Average initial drawn down $57 326 $48 168


Borrowers
Average Age 74 75
Married 56.4% 56.5%
Single – male 7.7% 7.6%
Single - female 35.9% 35.9%

Usages of Money
Home Improvement 57% 44%
Consolidate Debt 29% 14%
Holiday 25% 23%
Extra Income 30% 17%
Purchases for the home 18% 18%
New Car 36% 30%
Gifts to family and friends 14% 12%
Other 2% 2%
Immediate healthcare needs 7% 14%
More…….

Sentinel index….5
Auckland - South
Sentinel Lifetime Loan Index 2005 2006
Average property value of borrowers $282 670 $305 076

Average initial drawn down $38 583 $39 358


Borrowers
Average Age 72 71
Married 59.8% 66.7%
Single – male 8.0% 7.5%
Single – female 32.2% 25.8%

Usages of Money
Home Improvement 57% 54%
Consolidate Debt 18% 34%
Holiday 25% 24%
Extra Income 18% 11%
Purchases for the home 20% 14%
New Car 33% 22%
Gifts to family and friends 2% 8%
Other 0% 4%
Immediate healthcare needs 7% 5%

Auckland - West

Sentinel Lifetime Loan Index 2005 2006
Average property value $315 951 $348 905

Average initial drawn down $41 362 $54 463


Borrowers
Average Age 72 73
Married 65.2% 59.3%
Single – male 9.8% 14.3%
Single – female 25.0% 26.4%

Usages of Money
Home Improvement 51% 51%
Consolidate Debt 33% 29%
Holiday 25% 27%
Extra Income 20% 14%
Purchases for the home 25% 8%
New Car 26% 13%
Gifts to family and friends 5% 8%
Other 2% 0%
Immediate healthcare needs 11% 10%

More…….
Sentinel index…..6

Rodney

Sentinel Lifetime Loan Index 2005 2006
Average property value or borrowers $435 170 $538 200

Average initial drawn down $56 435 $40 626


Borrowers
Average Age 72 71
Married 81.1% 85.7%
Single – male 6.8% 4.3%
Single – female 12.2% 10.0%

Usages of Money
Home Improvement 61% 55%
Consolidate Debt 39% 23%
Holiday 34% 28%
Extra Income 30% 25%
Purchases for the home 14% 13%
New Car 30% 28%
Gifts to family and friends 5% 10%
Other 0% 0%
Immediate healthcare needs 7% 3%

ENDS

© Scoop Media

 
 
 
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